Best Interest Rate Banks

WTDirect sent out an email to account holders notifying us that they would be increasing the security of the login process. They’ve added a few new features that other banks have been using such as separation of the User ID entry and the password entry, addition of a picture, and new Security questions. As is the case with other online banks and brokerages, they will let you register your computer as well so you won’t have to go through the process every single time.

Here’s the email:

We’ll soon be introducing additional security measures to further protect online access to your financial information.

These new security features add a layer of protection to help us verify your identity, and help assure you that you are using the genuine WTDirect website. Your Password will now be on a separate page from your User ID, and we will ask you to confirm your chosen Security Image and Caption at Log In. We may also prompt you to answer one or more new Security Questions before permitting access to your accounts. For example, if you attempt to log in to WTDirect.com from an unrecognized computer, we will ask you to answer one of your new Security Questions and Image/Caption to ensure that you are permitted access.

As part of the introduction of these new measures, the next time you log in to WTDirect.com, we’ll request that you select and provide answers to two Security Questions and select an Image/Caption that will be used as additional identification.

These new security measures provide another example of why you can be confident that WTDirect continues to implement ways to protect your personal information and assets.

In the world of bank deposit accounts, there is a relationship between the liquidity of an account and the interest rate your deposits earn. The interest rate is known as an annual percentage yield, or APY, and the less flexible the account, the higher the interest rate. Certificates of deposit, one of the most illiquid deposit accounts at a bank, often has the highest interest rate APY because of how inflexible it is. With a certificate of deposit, you are locking in an interest rate and will be penalized if you need to withdraw your funds before the CD matures. So where do money market accounts live in the spectrum of interest rate and liquidity? They are somewhere between a checking and a savings account.

When I talk about the spectrum of interest rate and liquidity, I’m referring to the flexibility I mentioned with the certificate of deposit. At one end you have the most liquid accounts with the worst interest rates, checking accounts, and at the other end you have the least liquid and the best interest rates, certificates of deposit.

A money market account has some of the features of a checking account and some of the features of savings accounts. They offer high yield savings account level interest rates while still letting you write checks and access an ATM, which is pretty much the best of both worlds. There are limitations though, otherwise checking accounts wouldn’t exist because everyone would use money market accounts. Many money market accounts are limited to 6 ACH electronic transfer a month and tiered interest rates. The tiered interest rates means that you need high balances to get one of the better rates out there.

The best money market account rates remain very competitive with savings account rates, so it’s usually a good bet that, as a product, it has some appeal for you if you use high yield savings accounts.

Where can you open a money market account? You can go with your local bank where you already do business or you can find one of the top MMA rates list like I referenced above and look for someone there. Remember to read the terms and conditions because they will differ from bank to bank.

With the economic woes our nation is facing, politicians would like you to spend your money faster than you can make it. They’d love it if you could max out your credit cards and put more consumer spending back into the country, but thankfully you’re smarter than that, especially if you’re reading an article on high interest savings accounts. High interest savings accounts are savings products offered by online banks that give you a much better interest rate than your standard bank. Check out the savings rate of your current brick and mortar branch and let me know what the rate is, chances are it’s 1% or much lower. It’s not unreasonable for a brick and mortar bank to offer you half a percent or even lower! If you go with a high interest savings account, you could be earning around 3% - three times even the highest rate.

Where do you find these rates? Online banks. I list the best interest rate banks on the homepage of this site, but you probably want to learn a little more about each of the banks right? No problem.

FNBO Direct: They are the online bank of First National Bank of Omaha, which first opened in 1857 and has been covered by FDIC insurance ever since its inception. FNBO Direct’s FDIC certificate is #5452 and they have four stars from Bankrate’s Safe & Sound rankings.

Dollar Savings Direct: Emigrant Bank has two online banks - Emigrant Direct and Dollar Savings Direct. Dollar Savings Direct has a higher yield, a $1000 minimum to open, and is better than Emigrant Direct in almost every way. They are covered under certificate #12054.

ING Direct: ING Direct was one of the first online banks available, known for their ubiquitous orange ball and their funny name. They are the online bank of ING Group, which is a huge international financial service company headquartered in Amsterdam, Netherlands. Their domestically headquartered in Wilmington, Delaware, and were given four stars from Bankrate’s Safe & Sound rankings.

E*Trade Bank: E*Trade Bank is affiliate with E*Trade the stock broker and if you open an E*Trade Bank account you can link it up with your E*Trade trading account, which is a good or a bad thing! They are covered under FDIC certificate #30746 and were awarded Money Magazine Best of the Breed in 2007.

HSBC Direct: HSBC Direct is the online banking arm of Hongkong and Shanghai Banking Corporation, a huge international banking conglomerate. They are covered under FDIC certificate #57890 and are headquartered in McLean, Virginia.

In addition to the high interest savings accounts, many online banks offer very competitive certificate of deposit rates. By opening up a CD, you lock in an interest rate for a specified period of time. You give up some flexibility but when minimum balances are so low, it’s easy to open a small CD just to save a little extra.

What a crazy last few weeks! Almost every major online bank has dropped their rates twice in the last two weeks. That’s right, twice! I won’t go into the exact chronology of who dropped to what rate and then dropped to what rate, but suffice it to say, your best bets right now are to lock in a good certificate of deposit rate and then try to wait things out. Forget the money markets, forget trying to get a good rate with high yield savings accounts, to ensure a good rate you’ll have to go with a certificate of deposit.

The damage, as it now stands is:

• Dollar Savings Direct - 3.50% APY
• FNBO Direct - 2.60% APY
• EverBank - 3.51% APY Promotion Rate
• WTDirect - 2.81% APY
• E*Trade - 2.50% APY
• ING Direct - 2.20% APY