Capital One 360 has an business version of their popular online savings account, called 360 Savings for Business. It has no minimum balance requirements and no maintenance fees, while currently paying 1.05% APY. As with their personal account, you’ll need to link this account with a business account under the same legal name.
You can also get a $100 bonus upon opening an account by using the Reference Code BSA298 on your online application. Expires 2/28/2010.
Chase has an online coupon for a $100 cash bonus for people opening a new Chase Free Business Checking account with a least $500. Offers expires 3/15/10. Thanks to reader Tom. Selected fine print below:
Offer valid 2/1/10- 3/15/10. To qualify for this offer, open a Chase BusinessClassicSM Checking, BusinessClassicSM Checking with Interest, Chase Advanced BusinessCheckingSM, Advanced Business CheckingSM with Interest, Commercial Checking, Commercial Checking with Interest, or Chase BusinessPlus® Extra Checking account and deposit a minimum of $500 or more into your new business checking account within 30 days of account opening with funds not currently on deposit with Chase or any of its affiliates. Offer not available to existing Chase checking customers. Coupon must be presented at time of account opening. Cash premium will be deposited automatically into your checking account within 10 business days after the minimum deposit requirement is met.
Interest rates are still pretty low as we enter 2010, but I remind people that high nominal rates aren’t always better. Would you rather earn 3% with no inflation or 7% with 5% inflation? In any case, most of us have a chunk of cash and we should still try to earn the most no matter what the rate environment is like right now.
High-Yield Reward Checking Accounts
These are checking accounts that are still fully insured and pay a very high interest rate, as long as you jump through certain hoops each month. This also means that if you make a mistake you’ll forfeit virtually all your interest for that month, so it can be tricky. But for the very diligent, their rates are still averaging around 3-4% APY up to a certain balance limit. Here are a couple of the highest current account available nationwide:
Online Savings Accounts
These accounts pay a yield that at least a full percentage point (1%) higher than any current money market fund, while still providing easy access and safety with minimal hassles. The primary drawback here is that you are limited to a maximum of 6 withdrawals per month, as it is a savings account. Here are account that represent the range of the best current rates.
Certificates of Deposit
If you are willing to restrict access to your money for a while, your yield can go a bit higher, but not that much. On the other hand, if you think rates will stay low, it may be worthwhile to lock some rates in. Keep an eye on the early-withdrawal penalties if you do think you’ll need to withdraw.
You may have gotten a notice from your bank recently stating something like “Effective January 1, 2010 Your Bank will no longer be participating in the FDIC Transaction Account Guarantee Program.” Citibank is opting out, along with over 1,000 other banks (complete list).
What is the Transaction Account Guarantee (TAG) Program? In response to the financial crisis, the program basically allowed participating banks with all noninterest-bearing transaction accounts – like many checking accounts that earned no interest – to have unlimited coverage by the FDIC. It was part of the Temporary Liquidity Guarantee Program, and was designed to help calm the fears of depositors with lots of money in possibly shaky banks.
Now that some banks are feeling better about themselves, they decided that they’d rather save the money and not participate in the extension through June 30, 2010. According to Bloomberg, the cost of participation will increase to a range of 15 cents to 25 cents annually for every $100 of covered deposits, up from 10 cents currently.
But for most people this shouldn’t be a concern, as you’ll just revert back to the standard $250,000 per depositor covered by FDIC, currently set to last until December 31, 2013. I would hope if you had over $250,000 in cash, it wouldn’t be sitting in a non-interest bearing account!
I haven’t done an interest rate update in a while, as sadly there just hasn’t been that much to write about.
Reward Checking Accounts
These are checking accounts, usually through local credit unions, that pay a very high interest rate if you jump through some hoops each month. However, if you make a mistake you’ll forfeit virtually all your interest for that month, so it can be tricky. But for the very diligent, their rates are still averaging around 4-5% APY on balances up to $50,000. Here’s a recent example at 4.01% APY on up to $25k, which requires 10 check card purchases each month, a direct deposit/auto-withdrawal, and online statements.
For more, see my review of rewards checking accounts and also this list of accounts by state. I’d stick with small local credit unions with limited membership eligibility if possible, as the rates tend to be more stable. I myself got burned with nationally-advertised Evantage Bank that dropped its rates shortly after opening.
Online Savings Accounts Rate Updates
Certificates of Deposit
As stated above, for 6-months or less go with EverBank. In general, CD rates have been very low, and given how fast rates can rise as compared to how much further they might fall, I don’t see the benefit in locking up for money for a long period of time. Even a top 3-Year CD might get you 2.76% APY, according to MoneyAisle.
Remember, the new $250,000 FDIC & NCUA insurance limits per titled accounts are currently extended through 2013.
Someone e-mailed me about high-yield savings accounts for businesses. These can be a helpful tool to maximize interest income for all kinds of businesses with idle cash, including sole proprietorships, partnerships, LLC’s, and corporations. Here’s a quick rundown of some favorites.
The Capital One Consumer Bank for Business Savings Account pays 0.40% APY and has no minimum balance requirements or monthly fees. The benefit of this savings account is that you get the “it just works” factor of Capital One 360. There are no bells and whistles, it simply pays you a good interest rate, and provides easy and fast transfers to/from your existing business checking account.
Capital One / Costco
If you can open with at least $1000 and will keep at least $100 in your savings account, you can get a slightly higher interest rate of 1.40% APY with the Business Money Market Account from Capital One Bank. The perks of this account include checkwriting ability (you are limited to 6 withdrawals per month, 3 of which can be checks) and the sign-up bonuses for Costco users. Executive members can get $60 and Gold/Business members can get $20 after you open your first account and deposit $5,000 within 30 days.
(Considering upgrading to Executive? Buy a Costco membership certificate and get over $50 in coupons.)
Fidelity Investments
For maximum flexibility, you can open a Fidelity Account for Businesses and invest in anything from a money market fund to bond mutual funds to individual stocks. (Online stock commissions range from $8 to $19.95.) You’ll need $2,500 to open, but there are no minimum balance requirements or annual account fees. Currently, money market yields in general are very low. The Fidelity Cash Reserves fund currently has a yield of 0.28%. But if you were so inclined, you could invest in Treasuries, municipal bonds, inflation-protected bonds, or even dividend stocks.
I still love getting my bills via snail mail. I avoid online statements because I get over a hundred e-mails a day and it is very easy for me to put it off temporarily and never remember to read the e-mail again. A paper bill will stay on my desk until pay it and I file it away.
However, I essentially got paid $50 to sign up for paperless statements when signing up for the Citi Forward® Card (see my review), so of course I did it. This month, I barely got my payment in on time, and was only 2 days away from being dinged a $30 late fee.
As a result, I’ve been gradually visiting all my financial provider websites and signing up for online alerts, which e-mail or text you when certain criteria are met. For example, with Citibank I can get alerts for:
Credit Cards
Banking
For the credit cards, the option is under the “Account Profile” menu as opposed to under “Tools” where I thought it would be. See screenshot.
Some sites like American Express also have an alert that triggers when it is X days before the bill is due, but they still haven’t received payment, which find most useful. Another alternative would be to just set up auto-pay on the card while it was on e-statements. But if you’re like me, I just switched my Forward card back to paper statements after I got my 5,000 ThankYou points. Sorry, trees!
Online bank WT Direct has extended the terms of their $150 bonus promotion such that you only need to have your account funded by August 15th (previously July 31st).
You can read about the details in this previous WT Direct $150 bonus post. Keep in mind that this change actually makes the numbers for the promotion a bit better, since now you only have to keep your money there for 2 1/2 months instead of 3 months. Depending on your opening balance, you’ll get somewhere between 2.95% to 3.2% APY during your 2.5 month commitment. This is a higher yield than any bank CD that I’ve seen of similar maturity length.
It’s hard to believe that back in August 2008, I was able to get a 5% APY 12-month CD from Washington Mutual (now Chase). Since it’s almost time, I called today to see if I could designate how I wanted the funds to be disbursed upon maturity. However, I was told that I actually had to wait until the actual maturity date, and then call them within a 7 day grace period. If missed that short window, then it would automatically renew into another CD of the same term, and I’d be subject to early withdrawal penalties. (Up to 6-months of interest, which can mean you get back less than your initial principal.)
After a bit of research, it seems that many of the big banks do this. For example, with Bank of America, for CD account terms that are 7-27 days, there is a 1 calendar day grace period. For CD account terms that are 28 or more days, there is a 7 calendar day grace period. Yes, one calendar day, not business day, so if it’s a Sunday or holiday you still have to contact them? I’ve also read that some banks require you to physically enter a branch or send a snail-mail letter.
On the other hand, other places that I’ve dealt with, like Pentagon Federal Credit Union, allow you to choose how the CD should be treated right when you open it. I can have the CD renew, have the funds transferred to a PenFed checking account, or have it sent to me by check. I can even choose to either reinvest the dividends or have them sent to me monthly. I guess this is another example of credit unions often being more consumer-friendly.
Meanwhile, I guess I’ll just have to set up some Google Calendar alerts to text me repeatedly when this thing matures. The current traditional CD is paying only 0.25% APY, and the online CD is 1.25%.
You can keep up with where I’m putting my cash here.
The online division of Wilmington Trust Bank, WT Direct, is running another promotion for new customers. You can get up to $150 cash bonus on top of the standard interest rate (currently 1.76% APY) if you open a new account and maintain a certain balance from 7/31 to 10/31. Here are the balances and corresponding bonuses:
The fine print:
This offer is available to new WTDirect clients only. Primary account holder must not have held a WTDirect account in the past 12 months. To receive the bonus, a valid promotion code starting with the letters “WFIT” must be present on the application at the time of account opening. WTDirect account must be funded via electronic (ACH) transfer received by 7/31/09. Account must remain open and in good standing through 10/31/09, the end of the promotion period. There is no minimum balance to open the account but the bonus is determined by the account balance at the time of initial funding, which must be a minimum of $10,000 and must remain on deposit through the end of the promotional period. Bonus will be credited to client’s WTDirect account on or about 11/20/09. WTDirect reserves the right to cancel or modify this promotion at any time without notice.
If you click through the bonus link above, the promotion code of wfitc32_1760738 or similar should already be filled in for you.
The Numbers: 2.75 to 3% APY 3-month CD
How does the bonus work out when converted to an interest rate? To start, you are already getting 1.76% APY, or about 1.75% APR. On $10,000 for 3 months, that’s 10000 x 0.0175/12 x 3 = $43.75 in interest. Since the bonus is $25 for a $10,000 balance, this works out to about 2.75% APY. On a $50,000 balance, the bonus is $150 and works out to nearly 3% APY.
Therefore, you can treat this bonus as a 3-month CD paying 2.75 to 3% APY, which is more than 1% higher than any other available 3-month CD.
Application Process and Setup
I’ve already opened a WTDirect account for a previous bonus, so here a quick summary of what to expect when applying. First, they gather the personal info. Second, they use the now-popular Equifax ID check questions to verify your identity. Third, you can fund electronically with account and routing numbers, although you must come back and verify trial deposits later. Finally, you can electronically sign the application and disclosures. There were no physical forms to send in, although a welcome packet does arrive by mail. They state explicitly that there is no credit check.
As for practical matters, WT Direct’s online transfer system allows unlimited linked banks, and transfers to external accounts are free both in and out with a 2-3 day transfer time.
I saw that Vanguard has a new account called the VanguardAdvantage account. On the surface, it looks great. In addition to having full brokerage features (buy individual stocks, ETFs, options, and even brokered CDs), you also get full checkwriting abilities, ATM access, and online billpay. Since I have most of my retirement assets there, this would be good tool for added convenience and simplicity.
But then I found the catch. You need to have $500,000 invested at Vanguard to even be eligible for the account. Even at $500,000-$999,999 in assets, you have to pay a $30 annual fee for the privilege of getting what is basically a checking account, and you must pay $4.95 per month for Online Billpay service. No ATM refunds either (free at PNC banks only).
Vanguard seems to have an overall policy of grudgingly offering services that their customers ask for, but only if the less-wealthy are willing to pay a premium. I feel like they don’t want to stray from their basic roots of low-cost mutual funds, or maybe they just don’t want the hassle, but their competitors are leaving them behind.
Checking account features. For example, I can get the brokerage + checkwriting combo for free at Fidelity or Schwab, with no minimum balance requirements and ATM rebates. I don’t know about Chuck, but Fidelity has as-good if not better customer service reps than Vanguard.
Commission costs. The Vanguard Brokerage Services (VBS) account still charges $25 for an online trade + a $30 annual fee if you have less than $100,000 invested. Contrast that with 100+ free trades annually at only $25,000 in assets at both Zecco and Wellstrade.
I guess I’ll have to wait until I have a million dollars to get free checking at Vanguard. Doesn’t that just sound odd?
PNC Bank has a new online banking product called Virtual Wallet which combines multiple bank accounts and online money management tools into one site.
Virtual Wallet is comprised of 3 accounts working together:
• Your SPEND account is a non-interest-bearing checking account.
• Your RESERVE account is an interest-bearing checking account used for short-term savings goals. [currently 0.10% APY]
• Your GROWTH account is a savings account which earns interest and can be used for longer-term savings goals. [currently 2% APY up to $25k]
The SPEND account has a $25 minimum to open, while the other two have no minimum opening requirement. None of them have minimum monthly balances or monthly fees. Online statements are required, and you only get 3 free checks per month. ATM fee reimbursements are available if you keep $2,000 combined in the SPEND and RESERVE accounts. Looks to be available online to any state.
I see the motivation, but couldn’t this just be done with two accounts? The SPEND and RESERVE are basically the same… 0.10% APY difference?
If you open an account by 7/4 and initiate a direct deposit of at least $400 by 8/31/09, you can get a $75 bonus. Early closure fee of $25 if you close within 180 days. $75 also available with other PNC checking account types, but you can only get one bonus.
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