Online Savings Accounts with 3+% APY
Last Friday, I received an email from Dollar Savings Direct, which currently holds most of our cash, another rate reduction notice. This time, the yield of their savings account was lowered from 3.20%, a rate that they just adopted a week ago, to 3.05%. I opened an account with DSD in November 2008 after monitoring its rate for several months. Back then, DSD was holding its top-notch rate steady while everybody else was in the cutting mode. However since the beginning of 2009, DSD has somehow decided to follow the rest of online banks in changing its rate, dropping nearly a full percentage point in a span of one month, from 4.00% to 3.05% APY 
And DSD is certainly not alone. After getting the email, I went to update my Online Bank Interest Rates History table, the second time in a week. All I can say is interest rates at online banks are coming down fast and furious. What happened is like banks are chasing each other in lowering their rates, not raising them. Is the argument that a bank needs a good rate to attract deposits to shore up its capital basis no longer valid, even though the credit market is still pretty tight and banks failed at a very fast pace? Now it’s hard to find a bank offer 3.00% or higher yield. The following are banks from my list of best online savings & checking accounts that currently pay 3+% yield (some names are new, others have already been covered before):
- EverBank Yield Pledge Money Market: 3.51% APY*
- 1st Constitution Direct Super Savings: 3.50% APY*
- Doral Bank Direct Savings: 3.50% APY*
- First Trade Union Bank High & Mighty Savings: 3.25% APY
- CNB Bank Direct High Yield Savings: 3.20% APY
- ShoreBank Direct Online Savings: 3.15% APY
- DollarSavingsDirect Savings: 3.05% APY
- Chesapeake Bank Clear Sky Savings: 3.05% APY
- Century Bank Direct Online Savings: 3.04% APY
- Bank of Internet High Yield Savings: 3.00% APY
- Flagstar Bank Express Money Market: 3.00% APY*
Even though yields of online savings accounts are declining and could move even lower should the Fed cut its benchmark rate to zero, online banks still make a good option for short-term investment. With the banks listed above, you will get better return for your money than from investing in Treasury bonds, and your money is FDIC insured up to $250,000, so you know your money is safe with them.
In addition to online banks, where else do you park your cash?
* Promotional rates
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I’d be more receptive to ShoreBank if they didn’t constantly comment spam my site.
When I first wrote about ShoreBank, they sent me an email asking me to correct the name (I wrote Shore Bank). After I made the change and let them know, they didn’t even write back a single word.
DSD does not send me emails on rates…
Your rate for igo is incorrect. They dropped from 3.08 to 2.81 APY between 02/05 and 02/09.
I park at igo since it is relatively convenient. DSD’s account linking and authorization is inconvenient. So the only thing DSD had going for it was its APY was about 30% more than igo’s. With the current APYs (DSD APY = 109% igp APY) and downward trend in APY/APR, I moved all but 100$ of DSD funds to igo.
Since rates are poor there is not much rate differential when look for other banks. Other factors like bank quality, and convenience are what I look for. igo is 5th for APY for high yield MMA/Savings. If I were to open another account now, I would research customer experience on Flagstar’s 1$ opening, no fee, 3.00 APY MMA.
MKC: Thanks the correction. IGO was a mistake. I updated the rate history table with 2.81%, but somehow used an old data in the post. BTW, Flagstar’s MMA is also a promotional rate. I called them once in December and was told they don’t have an expiration date of the promotion and it has has been going on for quite a while.
This is a great list – thanks for sharing. Here are my thoughts on finding high yields http://ratenerd.com/high-interest-savings-accounts-2-169
My EverBank advice: Take advantage of their promo rate, then pull your money and close your account. Why?
1) Deposit money and it takes a week before if appears, so you lose the interest for that week. I can understand that somewhat; if your deposit fails, they don’t have to undo your deposit and interest earned.
2) Withdraw money and it takes a week before you get it. This is unforgiveable. EverBank obviously wants to keep your money for another week and not pay you interest.
EverBank has the right to determine their policies. I have the right to decide where I deposit my money. As long as these policies remain in place, I will stay away from Everbank.
Thanks for sharing such great list. What i like is interest rate of all the online banks are going down.