Looking for High-Yield Savings Account? Provident Direct could be an Answer

Not long ago, you can easily find an online bank that pay above 5% APY for your money. For example, from my last rate update at the end of 2007 (I didn’t update the list since them because banks kept lowering their rates even , you could get a 5.12% APY from UFB Direct or 5.05% from E-Trade. However, things changed a lot after the Fed’s 1.25% rate in January. Even when the Fed didn’t make any move between meetings, banks kept dropping rates to the current level around middle or low 3.00% APY.

Then last week on Fatwallet.com, there was a thread discussing a bank called Provident Direct, which currently pays 4.50% APY and that got my attention as I am still looking for a bank that offers better than the 3.86% APY from IGoBanking.

Provident Direct is the online division of Provident Bank (member of FDIC since 1943) a regional commercial bank that headquarters in Maryland with $6.5 billion in assets. The offers from Provident Direct include both high-yield savings and CDs. The high-yield savings account currently has an interest rate of 4.50% APY with $1 minimum.

According to the discussion on Fatwallet.com, the main concern of this bank is the $5,000/transfer limit on outgoing fund transfers. Though multiple withdrawals can be made in one day, as any other savings accounts, a total of 6 monthly transfers/withdrawals is allowed for this high-yield savings account. This means a total of $30,000 can be transferred out of the account every month. This amount is generally enough, but a little bit low if, for example, you deposit a large amount from 0% APR balance transfer. If the number of withdrawals exceed the monthly limit, the bank can reject the request or impose a fee of $5 per occurance.
Other fees include:

• $5 monthly fee for balance below $300;
• $25 fee for closing the account within 180 days;
• $10 annual inactive account fee for balance less or equal to $50; $20 if balance greater than $50.

Provident Direct supports ACH fund transfer and from what I read so far, there’s no hard credit check for opening a new account.

I may consider using this bank if its rate doesn’t drop too much after the Feb’s expected rate cut tomorrow.

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