Pentagon Federal Credit Union is now offering a generous 6.25% APY rate on it’s 3, 4, 5, and 7-year CDs (they call it a Money Market Certificate). These rates probably won’t last, so if this looks good to you you may want to jump in now.

These certificates may be a good alternative to online savings accounts for your emergency funds or other accounts with medium-length horizons. Penfed only has a $1,000 minimum on each certificate, and has relatively lenient penalties on early withdrawals. I wouldn’t use these for retirement savings if you’re young, though.

Since this is a credit union, you must meet their eligibility requirements to join. Basically all members of the military and their immediate families are welcome, as well as many other military-related groups. Otherwise, the easiest way to join is through the National Military Family Associaton (NMFA). Membership costs $20/yr, and you don’t need to renew in order to remain a PenFed member. There are some good benefits to being part of NMFA, such as scholarships, GEICO discounts, and helping support military families.

I’ve been a member for about 3 years now, and have been very satisfied with their customer service. They have other good financial products as well, including competitive mortgage loan products.

» E-Loan Savings lowered its rate from 5.50% APY to 5.38% APY. Commenters to my Eloan Savings review added that they had some transfer glitches as well.

» iGObanking is yet another online no-minimums savings account, offering 5.30% APY. I know little else.

» Capital One 360 recently raised its rate from 4.40% to 4.50% APY. $25 opening promotion.

See my online savings account comparison for a summary of the banking options out there.

Capital One 360 is trying to stir things up again by rolling out a new high-yield 360 Checking account. Paradoxically, there will be no checks. Initially available only to “active” users of their 360 savings account ($25 signup promotion), it is not available to everyone. It offers the following features:

• 1.75% APYif your balances is under $50,000, 3.20% APY for $50-100k, 3.40% APY for $100k+
• No minimums or monthly fees
• Free ATM access at 32,000 locations nationwide
• Free BillPay and Debit Card
• No checkbooks, but you can send paper checks online.

My initial feature review:

Interest Rates – The rates are above average, but not the best. The fact that it has no minimum balance does make it unique. Otherwise, if you can satisfy some minimum balance or direct deposit requirements you can get a higher rate at various other banks including Everbank. It’s interesting to note that ING has added a tiered system now. I would remember to be careful not to exceed FDIC insurance limits.

No ATM rebates? – It turns out those “32,000 locations nationwide” are the AllPoint Network. These ATMs are often in random restaurants, so you have to go during business hours. I was hoping for something special, like the ATM fee rebates that Everbank and others provide.

Must Mail In Checks – This is my main annoyance with all online checking accounts. You can’t make deposits via ATMs, so you have to snail mail them in. Besides having to pay extra for postage, it only takes one lost check to cause a huge headache.

What Do You Mean, No Checks? – This is supposedly the most innovative thing about this account. They don’t give you checks, and you can’t even buy third-party checks with your account and routing number. You can request paper checks to be sent to specific people online, or you can send them an “electric” check with their account and routing number.

Conclusion
From the features list and what I’ve read about Capital One 360’s customer service history, I think this is a decent product. Much like their savings account, it does not have all the best features, but due to it’s relative simplicity it will work for a lot of people. If you can live with mailing in all your check deposits and live near some AllPoint ATMs, it could probably work as your main checking account. Otherwise, it may just be nice addition to your their savings account due to the lack of fees (if you use it).

Right now, I still think the best options are for people who live in a Citibank or Washington Mutual area to get a checking + 5% APY savings combo with them. You get checks, ATM deposits, high interest, and instant inter-account transfers to maximize your savings balances.

Another no-fees no-minimums online savings account has arrived. This time it’s E-Trade Bank with the Max-Rate Savings Account. After looking around, here are what I see as the pros and cons of this account as compared to other online banks.

Pros

• No minimum balance, $1 to open, no account fees
• Competitive, but not exceptional (updated) 3.30% APY interest rate.
• E-Trade Bank has a great online funds transfer system. It is CashEdge-based so you can basically link almost any external bank account (also seen at HSBC, Bank of America). But what sets it apart is its transfer speed, allowing round-trip funds transfers with zero days of lost interest. Transfers both in an out are free.
• If you use E-Trade as your broker, can transfer between E-Trade accounts instantly. It appears that you can’t use this as your sweep account though.
• I have opened a few E-Trade bank accounts in the past (for bonuses), and was not hit with a hard credit pull.

Cons

• Competitive, but not exceptional interest rate. You may already be getting a similar rate, or be able to do better elsewhere, especially if you have higher balances.
• I have had bad experiences with E-Trade brokerage, including hour-long hold times and slow service. I’m not sure if the bank has a separate customer service department.

First Impression
If you already use E-Trade, opening a Max Rate savings account is probably a no-brainer due to the lack of fees. For others that move money around a lot, it may be also be useful to open one these accounts to take advantage of those fast interbank transfers.

As suggested in my survey, I am continuing to freshen up the parts of this site that are getting a bit dated. My old online savings account comparison just wasn’t cutting it, as a lot of new competitive accounts have entered the scene recently. I can’t keep up with every single bank, so instead I decided just to list what I see as the major ones and link to all the information that I’ve gathered about each. It’s now up on my Popular Posts section on the right.

Or, go directly to my new Online Savings Accounts Comparison page.

Unless you’ve been under a rock for the last few years, you’ve gotten 124 PayPal phishing e-mails telling you that your account has been suspended, yada yada, gimme your login and password. New variations come out every day. I bet that more people are being fooled than we know of, mostly due to the shame of admitting it.

I was just reminded me of one way to fight this problem by keeping a “firewall” checking or savings account. Basically, if you do a lot of online transactions with payment processors like PayPal or Neteller, or are simply paranoid about identity theft in general, you can set up an separate, empty bank account to act as a buffer. Let me illustrate:
[Read more…]

Speaking of good local bank account combos, if you have Washington Mutual banks in your area, combining their Free Checking and their new 4.00% APY Savings account (updated rate 8/08, only available online) also makes a great option. You get the convenience of local branches and ATM withdrawals and deposits, plus the high interest rates and online fund transfers of online banks.

I’ve had the Free Checking for about half a year and the Statement Savings for a couple of months now, so I thought I’d post up my experiences with them:

Basics
The WaMu Free Checking account has:
– No minimum balance or direct deposit requirements, open with $1
– Free basic checks for life
– No ATM fees on their end
– One free overdraft per year
– Free outgoing wire transfers.

The Statement Savings account has:
– A competitive 4.00% APY on all balances (as of 5/08)
– Rate is only available online
– No minimum balance requirements, open with $1
– Instant transfer to/from the Free Checking

Opening (and Closing) Process Review
I opened up my initial Free Checking account in-branch, and posted about that previously. However, you must open the savings account online, and in connection with a (separate, new) WaMu Free Checking account. The good thing is that you can open them both in 5 minutes and even fund using your existing WaMu accounts! Here are step-by-step instructions for existing WaMu customers.

If you didn’t already have a WaMu Checking account, you’re all set. But if you did, now you have two Checking accounts. But you have to keep the 2nd one open to maintain that happy 4.00% rate, otherwise it drops to something piddly like 0.25%. So, I decided to close my initial 1st checking account and just use the 2nd one. You know what the paradoxical thing was? I couldn’t close it online or via phone. I had to go into a branch and see a teller. How backwards is that? Be sure to bring all your old checks because they can shred them all for you.

Overall Review
The lack of almost all common fees is great. No minimums, no direct deposit needed, free checks, and so on.

The account is also very convenient. I can deposit checks directly into the savings account at an ATM, maximizing my interest. Can’t do that with an online bank. I can then move money into the checking account instantly online as I need it (limited to 6 times a month I think). WaMu has ATMs all over my area as well so withdrawals are easy too.

The online interface overall is good. It’s simple and it works, so I’m satisfied. The Online Billpay is the same way. I personally like BofA’s system better.

One nice feature that they only added in the past few months in online funds transfer! So now you can link up external accounts using just routing number and account number. They link via the usual two trial deposits. Note that WaMu yanks the spare change back. 🙁 Transfers are free both in and out, making things very convenient.

If you have a good Washington Mutual bank presence in your area, the lack of fees, convenience, and very competitive interest rate make this checking/savings combination very hard to beat.

With their high-yield certificates of deposit as well, it makes a convenient package:

Whenever there is a discussion about a big bank like Bank of America, Washington Mutual, or Citibank, there is always someone with “XXX Bank is evil, they did [something bad] to me, stay away from them!!!” But let’s face it, with thousands of branches it is very hard to get uniform service everywhere. An awful branch in Detoit might be counteracted by a great branch in Atlanta. It’s like getting bad service at a TGIF restaurant.

I have gotten both crappy and great service from banks, but only good service from my local branches of Washington Mutual and Bank of America. This has included the waiving of NSF fees, the manual crediting of missing bank bonuses, and an override of their usual funds availability policy. Two things that I think helped a lot:
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I recently opened a savings account at E-LOAN to try out the new 5.50% APY that a few people kindly pointed out to me while I was gone. Here’s a brief review of the opening process and my initial thoughts.

Basics
This is a new FDIC-insured online savings account, similar to Emigrant Direct, Capital One 360, and others. You need $5,000 to open the account, but after that there are no monthly fees. Per their rates page, they are currently paying 5.50% on all balances, so one won’t need to keep $5,000 there forever. But you may need to keep at least $500 in there (see below).
[Read more…]

Emigrant Direct has lowered their rate from 5.15% to 5.05% APY. If you’re interested in moving to Emigrant Direct’s online savings account with no minimums, why not get up to $20 along with it? Everyone who sent me their Form #2 in August for my Emigrant Direct Referral Bonus should have been paid this week. If not, let me know.

With rates rising, I guess they want some more money to lend out too:

E-LOAN Online Savings – 5.50% APY on all balances. Minimum opening deposit of $5,000, no monthly fees.

Countrywide Bank SavingsLink – 5.25% APY on balances of $10,000 – $49,999, 5.30% APY on balances of $50,000 – $99,999. Minimum opening deposit of $1,000, no monthly fees.