Savings account vs. Money Market

Where to stash your cash now

This article would be scary if I had my meager savings sitting in a money market fund. A money market fund is not the same as a savings account and could lose money. That has not happened yet but it could. I think that a lot of people are going to reassess where they put their emergency fund after reading this reprint of a Fortune magazine article on the Money/CNN website.

Fortunately, mine is in savings and a CD. Right now I have just over $4,000 in my emergency fund which is lower than my 2007 year end goal. I need to get with the program and start stashing away some cash. In the first several months of this year I have paid off almost all of my credit card debt and made a few large purchases, a bike and a laptop. Now it is time to buckle down.

Stock Market Turmoil and Interest Rates on Savings

It has been another really rough patch for the stock market lately. To makes things even worse interest rates on savings accounts are down. My 6 month CD at ING Direct matures on the 18th of this month. I am not going to roll it into another CD at ING because as of right now I can get a better rate if I were to keep it in my WAMU savings account. I will probably put it in another 6 month CD only this time it will be at WAMU at 3.93%. It figures that just when I start trying to build an emergency account that the interest rates fall.

WAMU dropped its Online Savings Rate

Yes, it finally happened. WAMU dropped its online savings rate from 4.75% APY to 4.25% APY. I had not paid attention so I am not sure when it dropped but I think it was within the past week or so. It is still not a bad rate, just not as good as it used to be.

Competitive CD Rates

With interest rates dropping I decided to compare CD rates from a few national banks. These rates are as of January 27, 2008 and of course are subject to change. Additionally, each of the bank may be running specials that are not considered here.

For those with $10,000 or more to invest, the E-Loan CD is a pretty good deal. If like me you only have small amounts to invest then ING Direct or Washington Mutual may make the most sense. I currently have two different $1,500 6 Month CDs. One with ING Direct at 5.15% and the other with Washington Mutual at 5.10%. Earlier this month I signed up for the Washington Mutual Savings for Success account that earns 6.50% that is essentially a CD that you can invest $25 to $500 in every month for 12 twelve months before it matures.

It would seem that in hindsight, I should have signed up for longer terms, but if I recall correctly the 6 month terms offered the highest interest rates. The banks probably were well aware that rates were going to be dropping. My ING Direct CD matures in March and my plan is to add another $1,000 to it and roll it into another CD. I need to do some more homework to determine where is the best place to put my $2,500 and for how long.

ING Direct has dropped its savings rate

In response to the .75% drop by the Fed, ING Direct has dropped its savings rate to 3.65%. Their CD rates have not dropped as much. As of this morning WAMU has not changed its online savings rate from 4.75%.I figures...now that I am actively saving money in an emergency fund, the rates start dropping.

WAMU Saving for Success

I noticed a full page ad on the back of the business section of last week's Sunday paper for a WAMU Savings for Success account earning 6.5%. I went online to WAMU.com and found no trace of such an account, so today I went to a branch location and asked about it.

Here is the fine print:

• Only offered in Georgia, Illinois, and Texas
• Minimum $1 deposit/Maximum $500 to open the account
• Must have automatic monthly transfers of $25 to $500 from your WAMU checking account
• You have to open the account at a bank branch

Basically it sounds like a 1 year CD. There is a penalty if you withdraw the money before 1 year maturity date. Once the year is over the money sweeps into an account that earns 2%. You can renew the CD after 1 year but the rate is subject to change.

I think this is a great deal and promptly signed up.

Still not done with Wachovia

Last month I thought I had completely washed my hands of Wachovia and their ridiculous charges for downloading Quicken. In my haste to rid myself of Wachovia I inadvertently forgotten to change the bank account that my car insurance is debited from so apparently according to the Wachovia customer service representative they did not close the account due to an upcoming scheduled debit. I was charged a $22 overdraft fee for this. I wish they would have just closed the account and I could have dealt with State Farm for the consequences. I have transferred funds from Wamu to Wachovia to cover the charge and hopefully it will go through later today. I just checked the Wachovia balance online and saw that I was hit with yet another $5.95 Quicken download fee because the account is still open. This has been so frustrating for me. I will NEVER do business with Wachovia again.

WAMU savings rate still at 4.75%

The Fed dropped interest rates last week by a quarter point but WAMU still has the same interest rate for its online savings account. ING Direct dropped its rate on savings accounts from 4.3% to 4.1% last week. I am glad that I moved my banking relationships to WAMU. I opened a $1,500 CD with WAMU last week just before the Fed dropped the rate just in case WAMU dropped its savings rate.

Update on WAMU ATM card

I am getting spotty customer service at the WAMU branches. I never received my ATM PIN in the mail as I was supposed to so early last week I called customer service. I was told that I could go in to a branch and they could provide me with a PIN. On Friday I went to a branch and despite how understanding and nice the people were about my PIN situation I was told that they would have to order me a new one to be mailed to me. I left and drove to another branch location and was greeted by someone eager to help me resolve the issue. He promptly inspected my ID and left me run my ATM card thru a machine whereby I could choose a PIN. Problem solved. I do not understand why the first branch could not have done that.

WAMU ATM card

Well it has been about 10 days since I received my ATM card from WAMU. Unfortunately, I have not yet received my PIN in the mail. I called tonight and the customer service representative said that it was sent out on the 14th and takes up to 16 business days to arrive. Geez! On Friday my paycheck is going into the WAMU account so that PIN had better show up soon. As a last resort I can go into a bank branch and get a PIN. Other than the fact that they are a bit slow in getting my PIN to me, the account is working out fine.

Update on my banking switch

I have now set up my paychecks starting with my next one to be direct deposited to WAMU. I will be so happy when I don’t have to deal with Wachovia nickel and diming me every month. I plan to completely close Wachovia next month after everything clears. Honestly, why should anyone keep large amounts of money or small amounts for that matter in a savings account that earns such a low interest rate that you have to search a while to find the rate on the bank’s website. I am glad to have finally seen the light. I am thinking about setting up a second free checking just for my expense reimbursements so they don’t get co-mingled with my paychecks. That may simplify my life even more.

Switch to WAMU

Bye bye Wachovia!!! I had threatened to switch from Wachovia to WAMU a while back but was wanting to avoid the hassle of changing banks. Well, after the $5.95 Quicken fee yesterday I decided to go ahead and bite the bullet. I opened an online savings and free checking account. It was relatively painless afterall and I am looking forward to the new relationship. My savings rate is 4.75% APR which is higher than ING Direct. I think it will be a good change for me. I do plan to keep my Wachovia savings account open with at least a $300 balance so that I can get cash from an ATM in an emergency if I needed to but I will definitely be closing the checking account. The WAMU website says that it only takes 7 minutes to open an account and I agree with them. They really do make it simple.

Wachovia and Quicken

I was charged the $5.95 access fee once again. UGH!!! I promptly contacted Wachovia to see why and apparently once you use it you are “enrolled” in it. I have now been disenrolled from it and should be able to download from the Wachovia online website without being charged the fee. I have asked them to refund the $5.95…we will see. Banks just love to nickel and dime us to death. My discover card charged me $3.11 interest last month. I have to use the card twice a billing cycle to maintain the 0% interest on my transferred balance. I have been paying $150 per month plus what ever amount I charged to meet my two monthly uses. Discover probably applies the entire payment to the 0% balance so I am accumulating interest on the additional charges. What a scam. I am so glad that I will get this paid off early next year.

Possible interest rate cuts

It looks like interest rates are coming down again. That is a good thing for people looking to buy a home but it is a bad thing for people with money in bank accounts. I may take another $500 and put it in a 6 month CD just to lock up a better interest rate. It is not a lot of money but it is something and because I feel I have so little I want to earn as much as I can on what I have. Last month when the federal reserve cut interest rates by .5%, my ING Direct savings account interest was decreased by .2% to 4.3%. I was able to start a 6 month CD with $1,500 and lock it in at 5.15%.

Banking decision

A while back I was contemplating moving my banking business to WAMU. I have not yet done so. One reason is that WAMU does not have nearly as many ATMs near me. The irony of this is that one of the regular ATMs that I use is near a WAMU. Unfortunately, that is the only WAMU ATM nearby. I have also figured out how to download into Quicken without incurring a charge from Wachovia. I cannot wait to see my bank statement next month to verify this. Wachovia is not my only banking relationship. In fact most of my meager savings is at ING Direct due to their much higher interest rates. I think I will stay with the status quo for now and not switch banks.

Switching banks from Wachovia to WAMU?

For the past several months I have been mulling over switching from Wachovia to Washington Mutual Bank. The primary reason for my switch would be the rates on savings accounts. I don’t keep very much in my Wachovia savings as I am accumulating my emergency savings in my ING Direct account. Would I save more in my regular savings if I earned more on the money? Probably. If I were to open up an Online Savings account I would earn 5% APY on my money. This is a much better deal than going into the bricks and mortar bank and opening an account to earn .25% savings. On the downside, WAMU does not have nearly as many ATMs in my city and that could end up costing me in fees. On the upside, I will not be charged for direct downloads into Quicken. I have started downloading directly from Wachovia’s site so that I will not be charged but it is not as convenient. I will make my decision by the end of the year.

Wachovia Fee for Quicken Downloads

August 8, 2007
For the past few months I have been hit with a $5.95 fee for downloading my bank info into Quicken. To be fair, Wachovia did tell me that this was going to happen if I did not have a Crown Access account but I still find this practice infuriating. I can get around this fee by downloading directly from Wachovia and that is what I plan to start doing.