Best Interest Rate Banks

If you’re looking for an updated list of the best CD rates, Blueprint for Financial Prosperity is keeping tabs on the rates for all the major banks offering a high yield on a term of less than 18 months. Current leader is a bank I’ve never heard of, Dime Direct, with Washington Mutual, or what’s left, taking 2nd with their 5.00% APY online CD. (the lowest rate on the list is E*Trade with their 3.10% APY 12-month CD). The list includes the bank, whether it has an associated high yield savings account, the last updated rate date, the rate, the term, and the minimum deposit. The list currently tracks thirteen banks.

Here’s the full list of Blueprint’s best CD rates.

If you have multiple online accounts, one good trick is to electronically link the two accounts together to facilitate the transfer of funds between them. All you need to do this is each bank’s ABA routing number and your account number to set up the link.

Some banks, like ING Direct, will require that you provide a paper check in order to create the link whereas others, like FNBO Direct and HSBC Direct, don’t require a paper check. So, if you want to link ING Direct to FNBO or HSBC, simply create the link on the FNBO/HSBC side and initiate transfers that way.

Here are the ABA routing numbers for the major online banks:

• FNBO Direct: 104000016
• HSBC Direct: 022000020
• ING Direct: 031176110
• Emigrant Direct: 226070319
• Virtual Bank: 067092200
• E*Trade Bank: 256072691
• WaMu: 322271627

By establishing the links, you give yourself the opportunity to transfer funds easily between accounts as you need them.

If you have a few extra dollars and are considering investing in the stock market but find yourself a little scared, don’t worry. Everyone new to the stock market is always wary of it because it’s such a huge beast. Millions of shares trade hands each day, billions of dollars fly around, and that’s just on the New York Stock Exchange. There’s the NASDAQ, Chicago, and countless other international stock exchanges. When you add in foreign exchange opportunities, options, derivatives, futures… it’ll make your head spin and give you a good reason to hold on for a minute. And that’s OK.

Take your time, there’s no rush, the market will be there once you’ve had an opportunity to read up more about how the markets operate and how you can best protect yourself against disaster. While you learn, put your funds in an online bank and it’ll earn a competitive interest rate that won’t make your retirement, but it won’t break it either.

Some people recommend putting your money in an index fund while you spend time learning, I think that’s a mistake unless you plan on learning for about five years. If the market takes a nosedive, as it did last October, you’ll have to leave your money in there and all your research will be put on hold until it recovers. While that’s not necessarily a bad thing, it’s simply not what you planned to do.

One great place to do this is E*Trade because you can have a bank linked to a brokerage account. While your cash is waiting for a good place to go, it can earn a competitive interest rate and be instantly transferred to your brokerage account if you need it for a trade.

The Federal Reserve is likely to increase interest rates in these next few FOMC meetings and that means that high yield online savings banks will begin increasing their rates as well. Already we’ve seen E*Trade increase their yield to 3.30%, inching closer to the bar that HSBC Direct has set at 3.50%. As we get closer to these future meetings, banks will start raising rates by a few tenths of a percent to entice you to move your savings from one bank to another.

Unless the rate difference is at least a 0.75% to a full 1%, I wouldn’t bother. On a $10,000 balance, half a percent is $50 if the dollars were transferred instantly. Take away taxes and you’re looking at even less. You’ll want to wait until it’s more, like $75 or $100 before you want to make the move because you lose interest when your money is between banks.

However, since the cost of opening a new account is near zero, you might want to consider opening an account at the highest current yield, 3.50% at HSBC Direct, and just move all new savings into that account for the time being.