Dollar Savings Direct Savings Account Is Still the Best Option

for me at least.

I was bothered a lot after seeing yields of my online savings accounts kept dropping like a rock since the new year began. The stock market has been a terrible place to be for investors for nearly one and a half years. Among various investment options, bonds and cash are the only ones that have been performed relatively well in this turbulent market. Unfortunately, that option has become less and less attractive as interest rates got pushed close to zero (see online savings account rates history for details on latest rates), even though it’s still the safest option. I can understand that commercial banks cut their interest rates following the Fed’s move. But lowering rates even when the central bank is idle is really troublesome.

After a score of popular online banks have rushed to lower their yields in the first three months, the situation seems to be stabilized recently. In early March, I announced that my short relationship with Dollar Savings Direct was ending as I was extremely disappointed by DSD’s near 2% rate cut in a little over two months. The bank which I moved my money to was FNBO Direct. The move, however, backfired because shortly after I transferred my money from DSD to FNBO, the later announced yet another rate reduction while DSD has been holding steady

Here are latest rates of banks I have account with:

• Dollar Savings Direct: 2.05% APY;
• Capital One: 2.01% APY;
• FNBO Direct: 1.90% APY;
• HSBC Direct: 1.65% APY;
• ING Direct: 1.50% APY.

Well, as you can see, the best option for me is going back to Dollar Savings Direct, which is exactly what I am doing: Move my money back to DSD and plan to stay there.

I always consider myself a rate chaser. Even though I didn’t always go to the bank with the highest rate, I want to get the most out of my savings. However, rate chasing in this environment doesn’t make too much sense because rates are changing very quickly and differenece between banks are getting smaller and smaller. It’s better to stay where I am instead of constantly moving around.

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