Rate Updates: FNBO Direct 1.90% APY, WTDirect 1.76% APY and E*Trade 1.45% APY

Online banks are not idle when it comes adjusting interest rates for their savings products even when the Fed is.

This week, a number of popular online banks rushed to lower their already low interest rates. Now it’s hard to find a decent bank that pays above 2% APY at the time when people are increasingly nervous about the stock markets. The latest rate changes at some big names in the online banking business are:

• FNBO Direct from 2.15% to 1.90% APY;
• WTDirect from 2.01% to 1.76% APY;
• E*Trade from 1.70% to 1.45% APY;
• ING Direct from 1.65% to 1.50% APY.

And the list goes on (check out Online Bank Interest Rate History for latest rates). Surprisingly, Dollar Savings Direct, which has been very active in lowering rates in the past couple of months, has been quite lately. I guess they probably feel that they have done the job already with their aggressive cuts.

Since I started tracking interest rate changes last December, I noticed that smaller banks tend to hold their rates steady in comparison to big, popular banks. For example, Redneck Bank is maintaining the 3.10% APY for its money market savings account while others have dropped below 2%. And that’s not introductory rate.

Are smaller, less known banks the place to go for better rates?

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