WaMu Online Savings Account Now 3.75% APY

Washington Mutual now pays 3.75% APY for their online savings account. Banks are competing for our money.

Looks like the competition is heating up.

I just got an email from Washington Mutual with the latest change to the interest rate of WaMu online savings account. The new rate, effective immediately, is 3.75% APY, up 0.45% from the previous rate of 3.30% APY, becoming the sixth bank to increase its rate in the past three months (E-Trade, WT Direct, FNBO Direct, HSBC Direct, EverBank have bumped up their rates early).

I myself don’t use WaMu (don’t I have enough bank accounts already?), but I know a few people do use the bank. With this latest rate change, I have to follow the same thought when I heard EverBank’s 4.75% APY promotion: What’s the reason behind such a big increase in rate, especially after the bank, which has heavy exposure in the sub-prime market, reported a lose of $3.33 billion in second quarter last week (Reuters)? Does it desperately need cash? Even though any deposit under the $100,000 FDIC insurance limit is safe, associating with a troubled bank doesn’t really make me feel comfortable.

Anyway, here are some additional information about WaMu online savings account:

• $1 to open an account;
• A minimum balance of $300 is required to avoid $4.00 monthly service charge;
• Service charge waived if savings account is opened together with a free checking account;
• $2 for each non-WaMu ATM withdraw.

BTW, here are what WaMu’s competitors are currently offering:

• EverBank Money Market Account: 4.76% APY three-month promo rate, $1,500 minimum;
• FNBO Direct Online Savings Account: 3.50% APY, $1 minimum;
• HSBC Direct Online Savings Account: 3.50% APY promo rate till Sept. 15th, $1 minimum;
• E*Trade Financial Complete Savings Account: 3.30% APY, $1 minimum;
• IGoBanking Savings Account: 3.28% APY, $1 mimimum;
• WT Direct Savings Account: 3.26% APY, $10,000 minimum;
• ING Direct Orange Savings Account: 3.00% APY, $1 minimum.

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