PerkStreet Financial is offering a PerkStreet Online Checking Account that allows account owners to earn cash back with their Visa debit card. Every time you use the debit card in non-PIN transactions, you can earn 1% cash back. Right now PerkStreet Financial is promoting the new checking account by giving each new customer who opens an account with $25 deposit a $50 bonus.

Online Checking Account

In order to receive the $50 bonus, you will have to make a deposit of at least $25 when opening the account. However, the checking account itself doesn’t have a minimum balance requirement. In addition, the free checking account also offers a free book of checks and free online banking and bill pay. The account does charge a monthly account maintenance fee of $4.50 if you don’t use your debit card even once in the month. If you use debit card more often than cash or credit card, this shouldn’t be a big problem. The monthly inactivity fee can be avoided if you do any of the following: making a transaction with your debit card, writing a check that clears the account, using online bill pay, initiating a withdrawal or making a deposit to the account.

You can also use the debit card to withdraw cash within STARsf network without paying a fee. If you use out-of-network ATMs, there will be a $2 fee for each cash withdrawal.

The Perks

With the PerkStreet debit card, you can earn 1% cash back for every dollar spent in non-PIN transactions. The cash back you earned can be redeemed for gift cards, free music or coffee. How’s how the cash back program works:

1% Cash Back

• Every $100 in non-PIN purchases earns you a dollar in perks.
• Every dollar perk you redeem gets you $1 on a PerkStreet Financial Visa Gift Card or a gift card from Target, Best Buy, Amazon.com, GAP or Ticketmaster.

Music

• Every $100 in non-PIN purchases earns you a song.
• Every song you redeem gets you $1 in credit at iTunes, Rhapsody or Amazon.com Gift Cards for MP3s or millions of other items at Amazon.com.

Coffee

• Every $200 in non-PIN purchase earns you a cup of coffee.
• Every cup you redeem gets you $2 in credit on a reloadable gift card from Starbucks, Dunkin Donuts, Peet’s Coffee and Tea and Bruegger’s Bagels.

About PerkStreet Financial

The PerkStreet Financial Debit Card is issued by The Bancorp Bank. According to the FDIC, The Bankcorp Bank is established on July 28, 2000 and has been a member of FDIC since July 28, 2000 (FDIC Cert: 35444). The bank is headquartered in Wilmington, Delaware and operates only one branch.

The bonus offer expires on December 31, 2009. To receive the bonus, in addition to the $25 deposit, you will also keep the account active for three straight months. The bonus will be deposited into your account within 15 business days of the end of the third month.

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After long delays, I finally opened the account in July. The process is a little bit longer than other bank accounts, but not tricky. There are five steps in the opening process.

At first, you will need to select the type of account you want to open. EverBank offers a quite few banking and investing accounts for you to choose from, including Money Market account, Checking account, CD account, World Currency account and investing accounts. If the Money Market Account is what you want to have, select it from the list accounts available.

Once you selected the account, you will need to provide personal information in the next step. All the information are pretty standard, such as your name, address, email, employment, etc. However, EverBank does conduct a credit inquiry as part of the procedure to verify your identity. You will be asked to answer a few questions based on your credit history, which is retrieved from your credit report during the process.

Not every bank verifies a new customer’s identity through credit inquiry. In the case of EverBank, the credit inquiry is a hard inquiry as it will show up in your credit report, even though it will be different from those when you apply for a loan or credit card. As EverBank puts in their Q&A section:

What kind of inquiry does EverBank obtain and how will it affect my credit score?

EverBank obtains a credit inquiry for the purposes of opening an account. While such an inquiry will show on your credit report, it’s coded differently than an inquiry for a loan and would have less of an impact on your credit score.

So even though it is a hard pull, it won’t affect your credit score that much, if any. However, if you are concerned about the impact on your credit, you can stop the process right there.

After your identity is verified, you will proceed with your application by selecting how much you want to put in your account as initial deposit and how you would like to fund your account. To avoid monthly account maintenance charge ($8.95 a month), you will need at least to have $5,000 in your account, but the minimum balance required to open the account is $1,500.

There are several ways to fund the account, including ACH, which is the method I chose. If you also choose to ACH, you will need to provide your bank’s name, routing number, and account number. Before you can use ACH to transfer funds between your EverBank account and external accounts, EverBank again needs to verify your ownership of the account by making two small trial deposits into accounts to be linked to EverBank. That will take a couple of business days.

After you finished the online application, your account won’t be active until you send a printed form with your signature back to EverBank to complete the process. EverBank will send you an email once they receive the paperwork to let you know that the account is now active. That will take some time, depending on how fast they process your paperwork. For me, it took about a week, so it isn’t too bad.

Oh, one more thing. During the online application, you will not be able to set up access to your account. Rather, you will have to enroll in online banking after the online application is completed. To set up your online account access, you will need to provide your account number.

Well, this is the whole process of opening a savings account with EverBank. As I mentioned earlier, the process is a little bit longer than what other banks have and it asks you to mail the application back to the bank, plus a hard credit inquiry. If you think you EverBank is the bank you want to have, the bank is actually pretty good after going through the application process.

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• Get a 1.70% Annual Percentage Yield on balances of $2,500 or more.
• Get a 10% bonus on your interest earned four times a year. Just open and use your Capital One credit card at least once a month or keep an average balance of $15,000 in your savings account each month to qualify.
• No Fees
• FDIC Insured

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News came out this morning that GMAC, the recipient of billions of dollars of taxpayer money since last December, is going back to the government to ask for more money. That would be the third round of bailout for what used to be the bankrupted General Motor finance unit (GMAC Financial was approved to be a bank holding company in December 2008 for it to receive government rescue fund). This is quite unique for GMAC because no other banks, not even Citigroup and Bank of America which have received much more money from the government than GMAC did, have asked for more than two bailouts. At GMAC, however, the trouble doesn’t seem to end, even after $12.5 billion infusion from the government. You may think that a bank receiving so much taxpayer money should have a better chance of surviving when there are signs that the condition of the economy and the financial market is improving. Unfortunately, that’s not the case for GMAC, which is still struggling to deal with massive losses from subprime mortgages. Now it’s going to ask as much as $5.6 billion more.

While GMAC is still in trouble, its subsidiary, Ally Bank seems to be doing quite well, at least from the rates it offers (Online Savings Account 1.70% APY, 1-year CD 2.00% APY). Actually, the bank has been giving exceptionally high rates since it switched its name from GMAC Bank to Ally Bank six months ago. Today’s news makes wonder how Ally Bank can afford to offer such high rates (Bankrate.com average 1-year CD rate is 1.70% APY). And Ally Bank ads are everywhere. Is it actually because of the billions bailout money it received? Of course, paying a higher rate can attract more savers (I was one of those ), but it also add additional cost to the bank that is in such a bad situation, even if it is a pure online bank.

Now that you know GMAC, or Ally Bank, is not healthy, will it change your perception of the bank?

I still remember what Washington Mutual did the week before it collapsed. After giving it so much money, I don’t think the government will allow GMAC to go under, but  the situation does concern me.

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The account works fine for me so far, with the only drawback that the account doesn’t pay any interest. Even though I don’t have a lot of money in the account, it still would be nice if I can earn some interests for the money I keep in it. A supplementary, interest bearing business account I am looking at is ING Direct Business Savings Account. Like ING’s Orange Savings Account, the business account has no minimum balance requirement and no monthly fee and it pays 1.15% APY as of now. The yield isn’t that great for a savings account, but better than other business savings accounts as far as I know. The account can be the savings option for many kinds of businesses, including

• Sole Proprietorships
• Partnerships
• Limited Liability Companies (LLCs)
• Corporations

The only requirement for the business savings account is to have a business checking account at another bank, which I do have with PNC, and link it to ING. Best of all, right now there’s a promotion of $50 bonus when opening an ING Direct Business Savings Account with promotion code BSA282.

I haven’t decided whether to get an account (yeah, another one) or not, but with no minimum deposit required, the $50 profit does looks pretty good

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However, for whatever the reason (nothing has changed in the environment since the Fed has kept the benchmark rate at the same low level for a long time), Ally Bank has decided to move up the rate of their online savings account from the current level of 1.70% APY to 1.75% APY, starting tomorrow. A strange move that I doubt will impress savers. Thought, this is a positive move, I am not impressed. Not only because the rate increase is so small (only 0.05%) that it’s almost meaningless, but mainly because I don’t feel there’s any stability in terms of rates at the bank right now. When I look at a savings account, I first want a good rate, then I want it to be stable. Unfortunately, Ally Bank offers neither from what I can see.

Despite the tiny change, I still hope it marks the beginning of an upward trend. Is that possible? It is, but unlikely. It will be too funny if Ally Bank makes the rate up one week, then down the next.

Update: Ally Bank made another increase of its Online Savings Account in September, which is now at 1.80% APY.

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When I updated our July net worth early this month, I mentioned that I opened another savings account. That’s was barely one month after I got an account from Ally Bank. The reason is that I became extremely disappointed by Ally Bank, not only because of all the troubles I had with the bank, but also the rate. I thought I got a good deal from a bank with a long track record of offering competitive rates. It turned out to be a big mistake.

Before getting the new account in July, I already own a bunch of accounts from a bunch of banks. However, none of them really deserve my money since their rates are all in the 1.40% to 1.70% APY range, far below than the 2.00% APY that I’d like to have. Then I looked around, but didn’t find many options. Good rates are very, very rare these days. After some research, I decided to go with EverBank. The bank currently offers a bonus rate of 3.01% APY, which is much higher than any other bank I have an account with is offering. However, the rate rate is only good for the first 3 months, then it will drop to the current rate, which is at 1.75% APY  right now, still better than what I get from Ally Bank or Dollar Savings Direct.

The process of opening a EverBank Yield Pledge Money Market Account is quite simple, though it does have a couple of more steps than other banks. For example, after the online application is completed, then bank asked me to print out the signature page, which certifies that the SSN I provided during the application is correct, and mail it back to the bank. I heard before some people said that EverBank was more difficult to deal with because of their verification process. To me, however, everything appeared going quite well (read more about EverBank Money Market Account including minimum deposit and monthly fee). I opened the account on July 22nd. On July 28th, the bank informed me that they have received my signature page and the account is good to go. The processing time is a little longer than that of other banks I have dealt with, but still acceptable (I’d like to have the entire process finished online only, no paper work involved though).

Once the account is up, the next step is set up external ACH transfer so I can move money between EverBank and my checking account at Bank of America. EverBank uses trial deposit to verify account ownership which takes about 2 days to complete. However, setting up the external account is a little bit tricky with EverBank. On the account home page, it has a button to “Add External Account”. But I can’t use that function because Bank of America (New Jersey) isn’t in the list of institutions that EverBank supports. To add my BofA checking account, I had to go to Transfer Funds, then External Transfer, then Add Transfer Account, and manually enter the routing number to find my bank. I wish EverBank has the option to enter bank routing number on the “Add External Account” page instead of only listing some banks and letting you select from there.

Another thing I noticed at EverBank is that the ACH fund transfers take a little bit longer to appear in the account than at other banks. I made two transfers on the same day, one to EverBank and one to another bank. The one to EverBank, which was my initial deposit, took exactly 5 business day to appear on my account while only 3 days to the other bank.

Once the external transfer accounts are set up, EverBank seems to be working fine for me. Of course, I don’t really use a savings account that much, so I rarely have issues with the bank (Ally Bank is an exception though).

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Since now I am working in the DC area and will soon be a resident of Virginia, I started to tune my radio to news stations in this area. Early this week on my way back from work, this piece of news got my attention. Virginia Governor announced on Monday that the state is setting up a Virginia State Employee Loan Program to help eligible state employees go through the tough economic time by lending them small, short-term loans from $100 to $500. The purpose for establishing this program, in partner with Virginia Credit Union (VACU), is to keep financially stressed Virginia state employees away from predatory lenders, such as payday loan stores.

To qualify for the loan, the applicant must be a VA state employee who is not on probation and a member of VACU with good standing. Even though there will be no credit check to determine the borrower’s credit worthiness, he or she needs to complete an “on-line financial fitness course and exam to keep them on sound financial footing” before being approved for the loan. While I believe the program is good for those need financial help in a difficult time, I am not impressive by the program itself for a couple of reasons.

First, I am not sure how much $100 or even $500 can help. Sure, the loan may be enough if one wants to buy back-to-school stuff for his/her kid(s), but he or she has problem making monthly mortgage payment, then the money probably won’t provide too much relief, even in the short-term. And according to the program, one can only have one loan at a time and a maximum of two loans within a year. Will that be helpful?

Second, the interest rate of the loan is not favorable at all. At 24.99% APR, the interest rate is more than 10 percentage points higher than the average consumer credit card rate, which is at 14.69% in June according to IndexCreditCards.com. People are outraged by the credit card industry’s practice of charging high interest rates even on those with good credit (hence the CARD Act of 2009), but I doubt there will be many complains about the interest charge. Sure, 24.99% is better than what payday loan shops will charge, but I don’t think I will use it if I want a few hundred dollars for an urgent need. Charging less than payday loans do won’t make it a good program. In my opinion, it’s just less bad.

In fact, I think there are better options out there, if only looking the money part of the program. The first comes up in my mind is borrowing money from credit cards. This idea may sound crazy with all negative coverage of the credit card industry recently, but it could be a valid option for those who use their credit cards responsively. I considered using credit cards as emergency fund myself when I lost my job two years ago. What I would do with this method is that I would get a couple of new credit cards with 0% APR balance transfer (now cards with 0% APR balance transfer are rare, but you can still find cards such as Citibank Forward Card and Discover Escape Card come with 6-months 0% APR balance transfer offer), then I would deposit the money into my bank account and use the money to pay my daily expenses. Usually credit card issuers will charge 3% fee with no maximum on the amount of balance transfterred (put the money in a savings account that pays 2.00% APY can offset a large part of the balance transfer fee), which can last from 6 months to one year, but the interest rate is much lower than the 24.99% charged by the Virginia State Employee Loan Program. Of course, there are risks involved in this approach:

1. You may not get the credit cards you want, depending on your credit history;
2. The credit limit you get may not be high enough since issuers have been very aggressive in reducing credit limit and closing inactive accounts;
3. You have to make at least minimum monthly payment in order to maintain the 0% APR; otherwise, you will end up paying the same interest rate or even higher if you miss one payment;
4. Getting a new credit may affect your credit score negatively.

In general, you have to be very careful when borrowing money from credit cards. Don’t use it unless you can manage your credit cards very well (read more on how to transfer credit card balance).

Another option, which I think makes a better alternative, is using social lending to fund short-term project. Comparing to the credit card method I mentioned above, peer-to-peer lending is new, but gained a lot of attention recently as banks tighten their lending due to the financial crisis. Lending Club is one of the P2P lending providers that I am using. Even though I am using Lending Club as a lender, not a borrower, people who borrow money from private lenders through Lending Club can get better rate on average as comparing to borrowing money from banks. For example, depending on the borrower’s credit, interest rates of P2P loans can be as low as 7.37% APR for top rated borrowers. Even for people with less than perfect credit, the interest rates, at the maximum of 20.11% for G graded loans, are still significantly lower than the Virginia program’s interest rate. And with Lending Club, the loan duration can be up to 36 months. Longer duration means lower monthly payment, making it easier for borrowers to pay back the loan.

Even though there are alternatives available for people to borrow a small amount of money at relatively low rate, the Virginia program is still worth considering for those who are in need because 1) the requirements are rather low (not on probation and at least $5 in VACU checking account) and it doesn’t require a credit check; 2) applicants must take a financial course and an exam before being approved for the loan, which could be beneficial to the applicants in the long-term.

photo credit: swanksalot

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Apparently, my posts on Ally Bank have gotten the attention of the bank and yesterday I was contacted by Laura Johnston, the executive of Social Marketing at GMAC Financial Service. She offered to have a Customer Service manager contact me to address my concerns. Since right now I don’t have much problem with the bank (the transfers were stopped and I moved my money out of the bank already) that needs to be addressed immediately, I decided to give her a full recount of my experience with Ally Bank, especially the part when I opened the second account. To be fair, I have never opened more than one account with any other online banks, so I don’t know whether what happened with Ally Bank could happen with other banks or not, which means the problems I had may not be unique to Ally Bank. Nonetheless, I wanted to tell the bank my story and, hopefully, my experience can help the bank improve.

In my response, I listed a few issues I have with Ally Bank that contribute to my decision to leave:

1. During the processing of opening my second CD account last week, I was shown the same account application page when I got my first account after clicking the “open accounts” button from my account. It seems that I will have to start the process all over again because it says I will need my driver’s license number and SSN. Only until I clicked the “start application” and made a selection on “How Many Account Owners?”, I saw the option to open an account as an existing customer. It will be much easier if the choice to open an account either as a current customer (I am still logging in my account, so I must be a current customer) or a new customer at the is given at very beginning, instead of having to click a few button to see the selection.
2. After selecting “Joint Account”, I also chose “Current Customer with user name and password. I can access my Ally Bank account”, because that’s what’s applicable to me, and the type of account type I want to open and opening deposit. Then I was asked to log in. This is where the problem started. Once I had that log in screen, I logged in with my own ID and password without thinking too much because I am a “Current with user name and password. I can access my Ally Bank account.” However, after I logged in, I was shown an account page where my name appeared as both the primary and secondary account owner, which wasn’t what I wanted to have in a joint account. So I called customer service and was told that to have both my wife and me appeared on the account, I had to log out, start again, and log in with my wife’s ID and password (my savings account and first CD account are joint account with my wife). I did what I was told to do and remember, the previous application never finished. The second time I had both my wife’s name and my name on the account, which is correct. The question is what if I want this to be a joint account with somebody else other than my wife? It looks like I wasn’t given the chance to enter the other person’s information.
3. When I got to the fund the account page, I saw two CD accounts with two different account numbers and both ask for $56,000 initial deposit. Apparently, the first attempt somehow went through, even though the process was never completed. Since I only wanted one account, not two, I selected to fund only one of them. I was subsequently given an error message, saying something like I have to fund both accounts in order to proceed (I don’t remember exactly what the error message is, but I can’t continue if I don’t fund two accounts). Without any other choice, I selected to fund both accounts with $56K and finally got the congratulation page, saying my accounts were successfully opened (something like that).
4. The next thing I did was listing accounts I own. In addition to the savings account I opened early, I also saw three CD accounts and the last two required a total of $112K deposit. Realizing this could be a big problem, I tried to edit one of the transfers, but I couldn’t despite that Ally Bank has the option to edit or cancel a transfer. I asked the CSR and later a manager why I can’t change the transfer that I made only minutes ago, I was told once a transfer is submitted, I am not allowed to edit or cancel it. If that’s the case, then what’s that “Edit” function for if there’s no way I can use it? I have transferred funds between banks very frequently and many banks, like HSBC Direct, IGoBanking, and Dollar Savings Direct, let me make changes after submitting a transfer request minutes or even hours later. But not with Ally Bank.
5. The only choice for me to stop the transfer and avoid overdrafting my checking account , as I was told, was to call Bank of America to put a stop order. I did and fortunately, the transfers were stopped so I don’t have to pay a load of overdraft fees for transfers that are scheduled to occur later.

My overall experience with Ally Bank is that it doesn’t make things easier for its customers. Rather I think some information is  quite confusing. I like to use banks that are easy to deal with. Since there are many banks out there, I feel that I don’t have to stick to a bank that has caused me so much trouble so far, even though maybe nothing is the bank’s fault. I like simple.

Finally, I told Laura that I was initially attracted to Ally Bank because it had better rates. Now, after less than two months, that’s no longer the case. What bothers me even more is that Ally Bank adjusts its rate every week. I am not aware any other bank does this on the savings/CD/money market accounts. When I open a savings account, I want a good rate and I want it to be relatively stable. Unfortunately, I have neither from Ally Bank now.

Do you have any issue with Ally Bank?

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For the two weeks that I banked with Ally, I felt very disappointed about the bank, not only because the trouble it caused during the process when I was opening my second CD account last week, which is very discouraging, but also the way the bank adjusts its interest rate. I was attracted to Ally because it had very competitive rates when the bank was re-launched in late May. However, in less than two months, the bank has reduced rates of all its products (CDs, Savings, and Money Market) significantly. What bothers me even more is that Ally Bank now seems to change its rates every week!!! Unlike other banks that made an adjustment then stay there for a while (a few weeks or even a few months), Ally Bank kept making small changes on a weekly basis since early June when it reduced its rates the first time. What I see from these small, but constant adjustments is that they just can’t make up their mind on how much they can afford to offer their customers. I really can’t figure out the reason behind all these frequent changes, even though they have every right to make whatever change they feel like to make. It’s like every time they looked around, they found that they can go a little bit lower and did exactly that.

I don’t understand it and I am not going to try to understand what they are doing. As I said, the only reason I opened an account with Ally Bank was that I liked the rate. Now that factor is gone, there is simply no reason for me to stick around. So today I moved the $1,000 initial deposit I have in the savings account back to Dollar Savings Direct, where I can earn 2.00% yield. After the transfer, I only have $1,000 left with Ally Bank in the 9-month CD account at 2.15% APY.

Maybe it’s a mistake to open the account with Ally Bank in the first place, with all what happened with the bank in the past two weeks.

BTW, I am very happy to see that two transfers I made last week didn’t go through after all. Bank of America blocked the two withdrawals, so no negative balance on my account any more. Maybe the stop order did work

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Last Thursday, I opened an Ally Bank 9-month No Penalty CD account. However, due to some errors in the process, I ended up opening two accounts, not just one as I wanted, each with an initial deposit of $56,000. Since I don’t have that much money in my account and Ally Bank said they can’t help me cancel the transfer, I called Bank of America immediately after initiating the transfers and paid $30 to put a stop order on the Ally Bank ACH transfers. I don’t want my bank account show a negative balance and to be charged any fee if that happens.

Then last night when I logged into my BofA account, I saw what I really hate to see: a negative balance of $51K, but it was not what I expected $110K. Among those pending transactions, there are two $56K withdrawals and one $56K deposit. Apparently, the stop order didn’t work. I can see where those two withdrawals came from, but couldn’t understand why there’s also a credit. So I called BofA again. After talking to a CSR, whose explanation didn’t make any sense to me, I spoke with a supervisor. She said since those transactions are still pending, she didn’t know much about them either and told me to wait a couple of days when the transactions settle to get an idea. Well, I don’t think I need anybody’s help to figure out what those transactions are if they already settled because at that time each transaction has a description tell me exact what it is. When I asked the supervisor the possible source of the credit, she said maybe the bank puts the credit in because I don’t have enough money in my account. But that’s also weird. If the bank can put $56K in my account, why can’t they put $112K to cover both withdrawals? The supervisor didn’t have anything more to say except asking me to wait.

Since I had my first bank account 13 years ago, I never had negative balance on my account, not even once. I always make sure I have enough money in it to cover our everyday expenses. Now that I have some -$51K in my account for the first time, I want to know what will happen next time. The manager told me I probably will be charged a $35 overdraft fee for each withdrawal until the account is replenished.

$35 for each withdrawal? This couldn’t have happened at a worse time because for years, I have scheduled to make nearly a dozen mutual fund, DRIP stock, and 529 plan investments on the fifth of every month, all withdrawing from my BofA account. In addition to the three $56K transactions, there are also a bunch of small withdrawals on my account because of these investments. If I have to pay $35 for each of them, I could lose hundreds of dollars in this mess

The first thing I did this morning when I woke up was checking my account again. While it still shows the same amount of negative balance, one thing did become clear: the $56K credit didn’t come from the bank (it’s quite naive to think the bank actually did that, isn’t it). It’s my own money. What happened was after I told BofA to stop those two transfers last week, I arranged to transfer the money to Dollar Savings Direct instead because I don’t want Ally Bank to have my money any more after what happened. That transaction appeared to be cleared on Monday, but somehow BofA took the money back. At the same, DSD also sent me a message saying that transfer failed. The two Ally Bank transfers, however, are still there.

As the last thing I wanted to do to stop the damage, I called Ally Bank today to cancel one of the CD accounts I opened and transfer the money back to BofA. Of course, I had to go over my story again with the CSR. They said they can do that, even without having to pay the penalty (because the account is opened for less than 6 days, so it’s not penalty free).

Now I can only hope this whole mess go away.

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When I opened Ally Bank accounts last week, I deposited only $1,000 in the 9-month No Penalty CD account. That’s just the initial deposit that I plan to add more to later after the account is set up (it doesn’t make too much sense to have only $1,000 in a CD account, doesn’t it?).

So this morning, I decided to put more money into the CD account, but first I want to transfer the money already in the Savings Account to the CD account because the CD yield (2.15%) is a little higher than the yield of the savings account (2.00%). Interestingly, it doesn’t have the option to do such a transfer:

It’s only possible to transfer between Savings Account and external accounts, but the CD account is not in the mix. At first I thought it’s pretty weird because banks usually allow transfers between internal accounts. So I called Ally Bank and asked why I can’t add new money to the existing CD account. I was told that I can’t add new money to a CD account that is already funded. I will have to open a new account if I want put more money in CDs. Quite understandable. If that’s the procedure, then I just have to follow it.

While still logging in my account, I started the process of opening another CD account. Then I was a little surprised to see that it seems that I have to go through the entire process as if I am opening an account as a new customer, not an existing customer (I am still logged in my account). It turned out that I need to select “How Many Account Owners?” first before I can see the option to open an account as a current customer. It would be much easier if it shows the option at the very beginning instead of having to click a few buttons to see it. But that’s not the real problem.

I selected Joint Account, the account I want to open (9-month No Penalty CD), put in the initial deposit I want to have in the account, then I was asked to sign in as I am already a customer (I am still logged in). Without thinking of anything else, I logged in again with my own ID. The next screen I saw was with me as both the first and second account owner. That’s not right. So I had to call Ally Bank again and was told that I have to log out and asked, log in with my wife’s ID, then I will have my wife and I as the account owners, not just me. I followed the instruction: Logged out  first (the application wasn’t completed yet when I logged out), logged in my own again, restarted  the application, and logged in with my wife’s ID. When I got to the point that I had to select how to fund the account, I noticed that there are two CD accounts with two different account numbers, not just one, with the same amount of deposits that I want to put in the account. That’s not right. So I selected only one account to fund, not two, but I got an error message, saying I must select how to fund the account. If I must in order to go to next step, I must. I went back, selected to fund both accounts using my BofA account, and got the Congratulation page.

Then I checked my account list. Yes, I now have 3 No Penalty CD accounts and on the Pending Transfers page, I have to pending $56,000 transfers. When tried to delete one of the transfers, the Delete button was just disappeared (both the Edit and Delete buttons are clickable when I got the page first, but they are all inactive once I selected an account). It was just a few minutes between I finished opening the account and I tried to delete the transfer.

So I had to call Ally Bank once again and was told that I can’t delete it now because the order is already being processed. When I asked them how much time they give customers to make changes (since they have that Edit and Delete functions available, they must allow customers to do so, right?), a manager said maybe a few minutes, even seconds). On the Pending Transfers page, this is what it says:

You can view, edit and delete your scheduled Ally Bank and External Bank transfers below. Any immediate transfers to a non-Ally Bank account are processing so you won’t be able to edit or delete them.

So basically, even Ally Bank, like another bank, uses 3 business days to clear an ACH transfer, it won’t allow me to change my transfer once I submitted the request. This is really bad. I had done ACH transfers with many banks and as far as I know they all allow me to make changes, immediately or even hours later, but not Ally Bank. They told me there’s nothing they can do to stop the transfer. If I want it stopped, I will have to call BofA and stop the transfer. So I did and it cost me $30

Yes, there may be mistakes at my end, but the experience I had this morning really made me upset. Not that it really matters now because Ally Bank just reduced the yield of 9-month No Penalty to 2.05%. The stop order at BofA will stop both transfers, so no money will be transferred to Ally Bank.

I really don’t like to deal with banks that make things difficult. Seems Ally Bank belongs to that category. And before I make any money from the bank, I already paid $30.

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The reason for me to decide to get an account now is that, despite recent cuts (which I suspected was done under the pressure from the Fed’s new policy), the rate is still quite attractive. After being disappointed by IGoBanking, I need a bank with good rates to keep my money. Ally Bank came up because of their No Penalty CD, which I am really interested in, not really because of their Online Savings Account that offers the same yield as Dollar Savings Direct does. Also, since Ally Bank’s predecessor GMAC Bank has a pretty good tracking record of providing higher rate, I am hoping that when the economic environment improves, the bank can be even more competitive than it is now.

Anyway, opening an account with Ally Bank is rather straightforward, taking only a few minutes to complete. In addition to the personal information that’s required by every bank when opening an account, I had the option to get both the online savings account and CD account with one process. I am not sure if other banks allow you to do that, or you have to open multiple accounts one-by-one, but I think it saves time. I can also set up an external account link during the application to make both the initial deposit and additional funds in the future (there are other ways to fund the account, but ACH is the most convenient choice).

Since Ally Bank uses trial deposits to verify account ownership, it will take a couple of days before the account is fully functional. Now I just hope Ally Bank won’t reduce the rate of the No Penalty CD before I can fund the account and lock in the rate

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I have left IGoBanking a long time ago, but moved back in April after seeing their actually increased the rate of their savings account from 1.85% APY to 2.12% APY, the highest yield among banks I have accounts with, while everybody else has been in the rate reduction mood for a while (see savings account interest rates history for up-to-date rates). Attracted by their good   rates, I moved all my cash savings from Dollar Savings Direct to IGoBanking in April and have transferred additional money to the bank several times since then.  Unfortunately, that good rate didn’t long. The rate was cut to 2.02% APY at the end of May and now it stands at 1.91% APY.

While I have no problem with banks changing their rates whenever they feel like it, the problem I have with IGoBanking happens when I try to move my money out of the bank. Last Friday right, I scheduled my first transfer of $15,000 from IGoBanking to my checking account at Bank of America. Since IGoBanking has a daily transfer-out limit of $15,000, I couldn’t move all my  money out at once. The first transfer order seems going through without any issue. But since then I got this error message every time when I tried to schedule another transfer:

Error: The transfer amount you have entered exceeds the daily limit for Standard Service Type.

Even though the second transfer was scheduled several days after the first one. Did I miss something here? That $15,000 is a “Daily Limit”. How can I exceed the daily limit when I scheduled two $15,000 transfers 3 business days apart? Since I was always from home since Sunday, I wasn’t able to call the bank to find out exactly what’s going on with my transfers. But if they give me any unacceptable excuse when I call, I will just ask them to close my account and send me a check. I hate dealing with banks that make things so difficult.

Speaking of rates, I just received a notice from FNBO Direct that the rate of their savings account is now 1.50% APY. I hope they know how pathetic that rate is. FNBO used to offer very attractive rate. Now they just became another ING Direct or HSBC Direct. And that seems to be a trend once a bank becomes popular.

Update: I called IGo and was told that I have wait till the first transfer settled, which usually takes up to 3 business days, before I can schedule another transfer. They do, however, have another option that requires me to email their customer service to get the account upgraded to $100,000 limit. I have already sent the email. Now I am waiting for the upgrade to complete so I can transfer my money out at once. I guess I will still keep my account

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The new offer is the High-Yield Savings Account from American Express. The credit card issuer received permission from the Fed to become a bank holding company last November. Right now the savings account has an yield of 2.00% 1.70% APY. There’s no minimum deposit requirement to open an account (of course, you will have to have at least $1 in your account to earn interest). The account has no monthly fee either and it’s insured up to $250,000 by the FDIC. AMEX uses trial deposits to verify account ownership. Once the verification process is completed, you can link external bank accounts to AMEX account and make electronic fund transfer (ACH). For the savings account, interests are compounded daily and credited every month.

In addition to savings account, AMEX also has CD products with maturities ranging from 3 months to 5 years. The 1-year CD rate is currently at 2.00% APY and 2-year at 2.50% APY.

Well, there isn’t much information on their website about the new savings account offer if you want to know more about it. When I look at  savings products, the only thing that matters to me is the rate. Without a good rate, there’s just no basis for any other features. To be fair, 2.00% 1.70% APY is quite appealing for a savings account in a weak environment (you can find comprehensive, updated rate information for popular online savings accounts). Here are what AMEX’s competitors are offering right now, to give you an idea of where it is,

• Capital One InterestPlus Savings Account 1.70% APY
• Ally Bank Online Savings Account 1.64% APY;
• Dollar Savings Direct Savings Account 1.60% APY;
• EverBank Money Market Account 2.51% 3-month bonus rate, 1.71% APY for the first year.

Speaking of savings account, I am still considering whether to get an account with Ally Bank (a savings account and a no penalty CD) or not. If it weren’t the rate cut last week, I probably had one already

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Just two days ago, I praised Ally Bank for offering very attractive rates for its products, including savings account, money market account, and CD, when the trend for interest rates is down in general. Today, however, it seems that Ally Bank has adjusted their rates down quite significantly. For example, the rate for online savings account is now 2.05%, almost at the same level as Dollar Savings Direct. And the one-year CD rate is reduced to 2.49% from 2.80% and the rate for 9-month no penalty CD (the product that I am particularly interested in) is now 2.30%, down from 2.50% APY. The Money Market Account rate remains at 1.90% APY. The reason for the sudden rate change is that Ally Bank has been under pressure from American Bankers Association (ABA) for providing an interest rate that’s significantly above the national average. In a letter sent to the bank in late May, ABA President & CEO said (with my highlights):

GMAC Bank/Ally Bank is offering interest rates well above the market in order to attract those deposit. For example, according to Bank Rate Monitor for May 18, the national average rate on 6-month certificates of deposit is 0.99%. Ally Bank is advertising at more than double this national average, at 2.13%. Rates offered by GMAC Bank/Ally Bank for 1-year and 2-year CDs are generally the highest in the nation. At the same time, the bank’s public financial reports have shown the bank to be losing money with losses of $112 million for all of 2008, and losses of $133.5 million in the first quarter of 2009.

This aggressive deposit strategy is particularly egregious when it is used by a trouble bank in which the government holds a controlling interest. Such a bank is significantly shielded from investor and market influences that might otherwise act as a brake on risky financial strategies. In the case of GMAC Bank/Ally Bank, the Treasury Department, through the Capital Access Program, reportedly recently added $7.5 billion in capital to the $6 billion of federal money already invested in the firm.

We believe that the situation with GMAC Bank/Ally Bank is analogous to that contemplated in FDIC rules governing brokered deposits sought by troubled banks. Such banks would never be allowed to follow the aggressive deposit strategy being pursued by GMAC Bank/Ally Bank.

Well, the message is loud and clear. Even though GMAC Bank has been offering rates that are significantly higher than its peers for a long time, the new Ally Bank can’t keep doing the same while receiving government bailout money. And it looks like the reason for Ally Bank’s rate reduction is exactly what I worried about in my previous post, that the national average rate the FDIC calculated will be used to limit interest rates offered by banks that are less well capitalized (apparently Ally Bank belongs to that category). In this case, ABA led the charge against Ally Bank. On one hand, the regulation is to protect consumers because a bank that is losing money should focus its effort on improving its balance sheet instead of paying extraordinarily high rate to attract new customers and giving the false impressions that the bank is financially strong, while on the other hand, regulating how much the interest rate a bank can pay its customers could end up hurt them if the bank’s competitors use the average rate to complain.

Anyway, too bad that I didn’t act quick enough to lock in the 2.50% APY for the 9-month no penalty CD when it was available. Now that the rate is lowered quite a bit, I have to reconsider whether to get an account or not, even though 2.30% APY is still pretty good.

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EverBank has been one of the banks that consistently pay savers highly competitive rates. After this rate increase, yield of the Money Market Account is the highest among online savings accounts that I track. Combining the bonus rate and current rate together, the actual yield of the account is 2.00% APY for balance up to 50K in the first year. The yield isn’t as good as, say, that of Ally Bank Online Savings Account, which currently pays 2.25% 2.00%APY (see Ally Bank Review for details), but it beats many other popular banks easily. For more information, check out my EverBank Money Market Account review for details.

In addition to the Money Market Account, EverBank has also increased bonus rate for its FreeNet Checking Account to 3.01% and the actual rate for the first year is 1.96% for balance between $50K and $100K. Go to my EverBank FreeNet Checking Account review for more discussions about the account.

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Now, two and a half years later, things have changed a lot in both the auto and banking industry. GM, GMAC’s parent and the once world’s largest auto maker, is on verge to file Chapter 11, despite billions of dollars capital injection. At the same time, GMAC Bank, after being approved by the Fed as a bank holding company last December, has also received billions of bailout money from the government to stay afloat. While GM is fighting for its life, GMAC seems ready to turn the page and make a fresh new start. Two weeks ago, the bank officially changed its name to Ally Bank , a move seen as to disassociate itself from its trouble parent (Ally Bank is still part of the GMAC family of companies though). Changing the name helps smooth the bank’s image and attract more deposits, but what really counts isn’t the new name. Rather it’s the bank’s products, including high-yield online savings account, money market account, and CD.  If I first went to the new Ally Bank website,  I was quite impressed by the bank pledges that all its banking products require no minimum deposit, no minimum balance and charges no monthly fee.

Online Savings Account 1.64% APY

Ally Bank’s Online Savings Account doesn’t have the highest yield, but the rate is every competitive . If you take a look at the history of online bank interest rates, you will see that Ally Bank Savings Account’s 2.25% 1.64% APY is one of the best available right now (the highest among big banks), despite the bank’s not-s0-healthy balance sheet. The bank has been keeping its rate relatively steady so far this year when compared with other popular banks such as Dollar Savings Direct, FNBO Direct, and HSBC Direct, which all have their rates cut below 2.0%. Other information of the online savings account and Ally Bank include:

• Free online banking;
• Daily compounded interests;
• FDIC insurance up to the maximum amount allowed by law (current limit is $250K, good till 2013);
• Ally Bank routing number 124003116;

Money Market Account 1.55% APY

In addition to the online savings account, Ally Bank also offers a Money Market Account that currently pays 1.55% APY. The rate isn’t as good as the rate of the online savings account mentioned above, but you get the extra benefits such as checking writing ability (however, there’s still the 6 withdrawals per month limit) and ATM fee reimbursement (up to $6 per month). The account is also FDIC insured and interest is compounded daily, the same as the savings account.

I am not a fan of money market accounts and checking writing and ATM fee reimbursement, though they are nice features, never really interest me. The only reason that I get an online account is for its interest rate, the higher the better. Therefore, if I ever have an account with Ally Bank, the Online Savings Account is what I want, not the Money Market Account.

Certificate of Deposits

If you are looking for fixed rate products, Ally Bank has two kinds of certificate of deposits (CDs): One is classic fixed rate, fixed term CDs with maturities from 3 months (1.70% 1.10% APY) to 5 years (3.10% APY). The yield of 12-month CD is currently at 2.80% 1.90%. The other, an more interesting one, is a 9-month no penalty CD with yield at 2.50% 1.49% APY. How the no penalty CD works is that you can withdraw your money and earn interest without  any penalty after you keep the money in the account for the first 6 days after the account is funded.

If you ask me my opinion about Ally Bank’s three products, then I think I like think I like the 9-month no penalty CD the most for several reasons. First, the interest rate is fixed at 2.50% 1.49% for 9 months. Right now we probably have already seen the lowest interest rate. The rate can only go higher from here. However, given the current status of the economy and job market, the rate will  likely remain low for some time. If that’s the case, then 2.50% 1.49% APY is very attractive. Second, even if the interest rate goes up sooner then expected, the no penalty feature allows me to get out early and put the money in products with better rates without being charged any fee. Finally, there’s no penalty after only 6 days. That’s nothing.

My Thoughts

Of course, the concern of doing business with Ally Bank is whether the bank is *safe*, given all the troubles at GM and GMAC. The government stress-test results show that GMAC will need to raise $11.5 billion capital for the worst case scenario. That may give people negative impressions about the bank. While the concern is real, I won’t worry about the safety of my money if I have an account with the bank because it’s protected by the FDIC insurance. Actually, I would worry more about whether Ally Bank’s interest rates are subject to the Fed’s interest rate regulation than whether my money is safe.

Now I am seriously consider getting an account myself. Actually, not one account but two. First an online savings account that links to my external accounts, then use that account to fund a 9-month no penalty CD account. I usually don’t want to own CDs because of the lack of flexibility (plus, many short-term CDs don’t beat savings accounts). But this CD is different because of its high yield and no penalty early withdrawal.

Are you using Ally Bank? What do you think about its products?

Update: I eventually opened an Ally Bank Online Savings Account and a 9-month No Penalty CD Account.

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On September 22, 2008, WaMu surprised many people by offering one of the highest interest rates for its savings account. At 4.0% APY, the yield was very attractive and competitive. However, that didn’t last long. On September 25, WaMu was closed by the Fed and later sold to JPMorgan Chase for a fraction of what it was worth. Given the situation WaMu was in at that time and all the rumors that it was trying to sell itself but found no buyers, the bank’s decision to boost its interest rate was questionable. Now, when we looks back, it seems that the move was more like a tactic that WaMu used to attract more deposits before it failed. The question is for a bank that was in as much trouble as WaMu was, can it still offer savers the kind of interest rates WaMu offered when it knew its survival was in question?

Then early this year, the FDIC took up the issue and proposed a regulation that will prevent banks in bad financial shape from offering excessive interest rates. The proposal wants to set an upper limit on interest rates weak banks can provide to its existing and potential customers. The interest rate cap is calculated by the FDIC based on the average of interest rates paid by all insured depository institutions. Even though at that time there was no word on how high or low that average of interest rates will be, what it will do to bank savings accounts seem to be obvious: Savings account yield will be lower once the new regulation takes effect. While the target of the new rule are those banks that are less than Well Capitalized, I feel that all banks will be affected because if the bar is lowered, by the Fed, banks will all reduce their rate, whether they have enough capital or not. Just like the current cycle of rate reduction, there’s simply no reason for a bank to maintain a high rate is everybody else is paying less. As long as its rate is better than others, the bank can still attract customers from its competitors.

Last Friday, the Fed released its first national rates for savings, interest checking, money market accounts and CDs, and rate caps for those accounts. Based on the Fed’s calculation from as many as 74,000 banks and their branches, the national rate for savings account with balance less than $100K is 0.22% and the rate cap is 0.97%. For balance greater than $100K, the national rate and rate cap is also set at 0.22% and 0.97%, respectively. These rates, as you can see, are significantly lower than those currently offered by most savings accounts that I know.

The new rule won’t be effective until January 1, 2010 though.

What do you think of this new rule? Is it a good idea?

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Right now, there are a couple of banks offering $100 bonus when you open open a checking account with them.

Chase Checking Account $100 Bonus

Open a Chase Checking Account before June 23rd and get $100 bonus when you set up a direct deposit or make 5 debit card purchases within 60 days after the account is open. Use this link to get a coupon code emailed to you (the one I got is 3483261250016334) and bring the coupon to a Chase branch office to open an account. The checking account has no monthly fee, but requires $100 minimum deposit. The bonus will be reported to IRS on Form 1099-INT.

WaMu Checking Account $100 Bonus

WaMu is becoming Chase, but if you still have WaMu branches near you, then you can also get a $100 bonus from WaMu when you open a WaMu Free Checking Account and set up direct deposit or make 5 debit card purchases, same as the Chase Account above. With this account you get free checks, free only banking and bill pay, and free ATM withdrawals at any ATM. The account has no monthly fee and it can be opened online with $100 minimum deposit.

USAA Checking Account $100 Bonus

This offer is valid to USAA members only. From now till May 31st, open a USAA Free Checking Account with direct deposit and get $100 bonus. The account requires $25 minimum deposit and it has no monthly fee. Other features include free online and mobile banking and bill pay, free ATM worldwide, free checks and free rewards.

Update: Check out the latest bank & broker bonus offers, getting up to $100 when opening an account.

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Now we have a new bank playing the high-yield game.

ProvidentNJ Direct Power Savings 3.25% APY

Even though this is only a introductory rate, it still looks very good. ProvidentNJ Direct is offering a 3-month promotional 3.25% APY for its Power Savings Account.  After the introductory period, the rate will be determined by the deposit amount and current rate. For balance between $50 and $9,999, the yield will be 1.75% APY and for balance over $10,000, the yield will be 2.25% APY, significantly lower than the promo rate, but still quite attractive.

ProvidentNJ Direct is the online division of The Provident Bank, which was established on February 28, 1839. The bank, headquartered in Jersey City, NJ, operates 84 branches in the state and has been insured by the FDIC since January 1, 1934 (FDIC certificate number 12010).

To open an account and enjoy the 3.25% APY, you will need a minimum deposit of $50. Other information about ProvidentNJ Direct:

• The Provident Bank routing number is 021205499;
• Free online banking;
• Free Provident ATM card;
• Electronic statement only via Provident Connect;
• Trial deposit account ownership verification;
• Bankrate.com Safe & Sound Rating gives Thank Provident Bank 4 stars out of 5.

In addition to the Power Savings Account, ProvidentNJ Direct also offers a Green Checking Account that pays 3.75% APY for the first $1,000 deposit. Like the Savings Account, the Checking Account is also nationally available.

Bank of America Fork SaveSmart Direct Savings 2.20% APY

No, this bank has nothing to do with Bank of America. Bank of America Fork is small bank that does its business in Utah, where it has 11 branch offices. The bank was established on January 1, 1913 and has been FDIC insured since January 1, 1934 (Certificate number 12773). Currently, Bank of America Fork is offering tiered rates for its SaveSmart Direct Savings Account:

• Balance $10 – $999: 0.50% APY
• Balance above $1,000: 2.20% APY

And if you have more than $250,000, which is the limit covered by the FDIC insurance, you can get 2.30% APY.

Other features of the account include:

• Bank of American Fork’s routing number is 124301025;
• $10 minimum deposit to open an account (can be funded by credit cards; $1.50 monthly fee for balance below $10) ;
• Up to 3 links to external accounts;
• Free online banking;
• Up to 6 preauthorized monthly withdrawals ($1 for each withdrawal if over the limit);
• Bankrate.com Safe & Sound Rating gives Thank Provident Bank 3 stars out of 5.

These two banks have been added to my online savings accounts list as well as the Online Bank Interest Rate History where you can find the latest rates.

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PNC Bank is offering a $75 bonus for a new personal checking account (Free Checking, Performance Checking, or Performance Select Checking)  with direct deposit. In order to qualify for this bonus offer, you must open an account between April 26 and May 9 and make at least $500 direct deposit into the account before June 30, 2009. Once the the deposit is made, the bonus, according to PNC, will be credited within 7 days. I recently had some very unpleasant experience with PNC and their last promotion. So if you are considering taking advantage of this offer, make sure you keep the promotion page for your record in case later they ask you a proof of their OWN promotion. BTW, if you are already a PNC Bank or National City Bank customer, then you are excluded from this offer.

Investors Savings Bank is having a promotion that gives $100 bonus for a new checking account, such as a Free Checking, Preferred Checking, Edge Checking, or High-Yield Checking, for New Jersey residents. To qualify for the bonus, you also need to set up a direct deposit of paycheck or recurring payments from sources like pension or social security, with $300 or more. The $100 bonus won’t be paid all at once though. It will be paid in $25 increment at the end of each quarter. So it will take one year for you to receive the full bonus. And if you close your account within first 12 months, all bonuses paid will be forfeited, plus a $25 fine. While the website doesn’t mention is explicitly, it does say that you will need to go to a branch office to open the account, instead of online. Since the bank only operates in NJ, out of state savers may not be able to take advantage of this offer.

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I heard some nice words about PNC before deciding to use it. However, my short relationship with the bank so far turned out to be a terrible one. At the time when I opened the account, they had a promotion which will give a $75 bonus for either a new personal or business checking account. That’s one of main reasons I chose PNC. Nearly two months after opening the account and setting up online banking (which is one of the requirements), I still didn’t see the bonus in my account. So I called the branch office last week and talked to the associate who helped me open the account, the very person who had made the whole thing a mess. She said she will look into it and let me know later.

This morning I got a call from her and, guess what, she said they don’t have any record that there was such a promotion in January. Then she asked whether I could fax to her the flyer I got from that branch when I opened the account.

I can’t believe it.

Good that I still have that piece of paper with me. Otherwise, I will probably never see that  $75!

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You are lucky if your bank pays you 3.0% or more for your money, unless you use one of those high-yield rewards checking accounts that always have a cap on how much money you can put into the account to earn the sometime 5+% yield. And, as you can imagine, the limit isn’t that high (usually around $25,000).

Then there are always new banks coming up with good rates to try to attract customers away from more established banks.

Darby Direct Online Savings Account

Darby Direct is the latest bank I found that offers a very competitive 3.00% APY for its High-Yield Online Savings Account with only $1 minimum initial deposit.

Darby Direct is the online division of Darby Bank & Trust Co, which was established on January 1, 1927. The bank has been a member of FDIC since December 18, 1934 (FDIC certificate number 14580). So you know your deposit at Darby Direct is protected up to the maximum by the law ($250,000 until December 31, 2009).

Other information about Darby Direct:

• No monthly fee;
• Interest accrued daily, compounded and credited every month;
• 6 pre-authorized transfers per month;
• Links to external accounts available;
• Routing number 061211168;
• Bankrate.com Safe & Sound Rating 2 stars out of 5 (Below peer group).

Heartland Bank Direct Performance Savings Account

Heartland Bank Direct Performance Savings Account’s 2.30% APY isn’t as good as that of Darby Direct, but beats most online banks easily. There’s also no fee, no minimum for the account, but it does require $500 to open an account. Heartland Direct Bank is a division of Heartland Bank, which was established on January 1, 1887. The bank has been insured by the FDIC since October 12, 1936 (Certificate number 28694).

• 3 business days ACH holding period;
• 6 pre-authorized transfers per month;
• Trail deposits to verify account ownership;
• Interest accrued daily, compounded and credited every month;
• Routing number 081074495;
• Bankrate.com Safe & Sound Rating 3 stars out of 5 (Performing).

BTW, speaking of new banks with good rates, Redneck Bank, which I discussed early last month, apparently has been overwhelmed by savers’ chase for their 3.10% yield that they decided to shut its door, though temporarily. It comes a little bit too fast, doens’t it?

Original Post on The Sun's Financial Diary

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While I talked a lot about bank accounts, one  that I almost never touched is reward checking, which is a relatively new product but gaining popularity these days.

What is Reward Checking

Reward checking accounts, often offered at small banks or credit unions, are checking accounts that pay high interest rates, much higher than what you could get from a high-yield savings account, but with a few strings attached. Usually, if you want to get that high interest rate, you will have to:

• Make a direct deposit (or automatic ACH debit) every month;
• Use the check card, or debit card, at least 10 times in a cycle;

plus a couple of other minor requirements such as paperless statement, etc. The direct deposit isn’t too bad if it’s the account you eventually use as a primary checking account. It’s the debit card transaction that keeps me away from any reward checking account. It won’t be a problem if you use debit card to make purchases a lot, but since I am a credit card person, that’s not going to work for me. And if you fail to meet the requirements in any given month, you can still earn interests on your deposits for that month, but at a fraction of the rate. In addition to higher interest rates, many banks also reimburse ATM fees charged by other banks for using their ATMs, as long as the same requirements for earning the high-yield are met (ATM transactions doesn’t count though).

Because of the high interest rate for reward checking accounts, most banks put a cap on how much deposit in your account will earn the high rate, usually at $25,000, but can be anywhere from $10,000 to $75,000. Any deposit over the limit will earn a lower yield.

Reward Checking Deals

As you see from the above, reward checking does have a few very attractive features and could indeed be very rewarding if you meet the requirements. Is reward checking a product that you can use? If so, then check out the following banks which offers 5% or more for their reward checking accounts.

You won’t find any bank pays such a high yield on a savings account for sure

Original Post on The Sun's Financial Diary

Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus