Dollar Savings Direct 2.00% APY and GMAC Bank 2.00% APY
Update: Check out the Dollar Savings Direct review post for more detailed discussion on DollarSavingsDirect bank and my account opening experience. And latest rates can be found on the Online Savings Account Interest Rate History page.
When ING Direct lowered its rate to 2.75% APY last week after the latest 0.50% rate cut by the Fed, I predicted that more banks will follow suit to reduce their rates because that what they usually do. One week later, ING Direct is still the only bank that actually did lower the interest rate. Am I surprised? A little bit, but not totally unexpected. Given how banks have become cash-strapped lately because of the credit crisis, it won’t be hard to imagine that banks would maintain their rates in order to keep the cash.
I haven’t updated my interest rate table yet, but I did notice that two of the banks apparently increased their rates recently. One of them is Dollar Savings Direct. When I first looked at the bank at the end of August, the rate was 3.75% APY. Now Dollar Savings Direct Savings rate is at an impressive 4.00% 2.00% APY, probably the highest rate out there (EverBank’s 2.51% bonus APY is higher). Not bad for only $1,000 minimum. Dollar Savings Direct is new, but I am not worry about whether the bank is secure, definitely not a scam , because the parent company of Dollar Savings Direct is Flashing Savings Bank, the bank that owns Emigrant Direct which has been around for a long time and is a very popular online bank.
The other bank is GMAC Bank. (GMAC Bank was recently rebranded as Ally Bank). The GMAC Online Savings rate is now 3.00% 2.25% 2.05% APY with $1 minimum (last time I checked it was 3.00%, nice increase), higher than any of the banks I am using. GMAC Bank has Bankrate.com Safe & Sounding Ratings of 3 Stars (out of 5). GMAC Bank routing number is 031176136. Check out my full Ally Bank review for more information on Ally Bank products.
With what’s happening on the Wall Street, putting the money in a FDIC insured bank that earns 4.00% return isn’t that bad. I am not giving up on stocks as I am still making monthly purchases in my mutual funds, but I admit that cash makes me feel a little comfortable now. Though the same amount of cash can buy more and more shares of mutual funds, ETFs, or stocks every day, it’s kind of a pain to watch the newly purchased shares worth less and less. That’s not fun To me the current situation is like when I started investing at the end of 2001 and through 2002 and 2003: I kept buying shares, but kept losing money, on paper. Now I can only hope three or five years later, the shares I bought today can make a bigger contribution to my net worth calculation, on paper
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