I knew Presidential Bank would step it up. I have the majority of my cash at there, and kept it there even in the wake of Emigrant Direct’s recent 4.0% APY interest rate. Presidential Bank’s Internet Checking Plus Account [review] now pays 4.0% APY interest. And its Premier Savings Account [review] now pays 4.12% APY. Of course, both these accounts have additional restrictions that Emigrant Direct does not have like minimum balances, but it also offers more features like check-writing and online bill paying. It works great for me, but is definitely not the best fit for everyone. Check out my Online Bank Comparison page for some side-by-side stats.

Capital One 360 is now showing 0.75% APY on their site. Hmm… a rather weak reply to Emigrant Direct’s jump to 4.0% APY if you ask me. Still, the beauty of these accounts is that you can transfer money between them as you’d like. Although I’m sure ING is relying on ‘financial inertia’ to keep some people from moving their money out, even though you can even link Emigrant Direct and Capital One 360 together now.

For more information, please see my Capital One 360 Info Page and my Online Bank Comparison which compares many of the popular online savings accounts.

After linking Capital One 360 and Emigrant Direct directly, I just checked and my $5 test transfer from ING -> Emigrant over the weekend just posted to Emigrant today, so it is officially possible to move your money from 3.30% to 4.00% with just a few clicks!

Sweet. Emigrant Direct’s American Dream Savings Account is now paying 4% APY [Info Page, Bank Review], up from 3.50% and leapfrogging basically everyone in the liquid online savings arena, including Presidential Bank’s Premier Savings Account. And I just moved over ten thousand dollars out of Emigrant in the last two months. But I don’t think the interest rate wars are over yet. Things continue to look up for savers! An arbitraged $20,000 balance transfer at 0% APR would now earn $800 a year!

Yes, I used ‘Direct’ three times in the title. Many people have wanted to link their new Emigrant Direct account with their existing Capital One 360 accounts. However up until recently, unless you used your Capital One 360 account as your initial funding account, you couldn’t do this, as both required checks to link additional accounts. But thanks to a new check-less linking feature, it has been done! I got this idea from Consumerism Commentary.

First, log in at ingdirect.com, and click on the link about Externally Link Accounts. Then click on the Add Link button. You’ll need to know the name of your bank, the routing number, and the account number. For Emigrant, the name is Emigrant Savings Bank, and the routing number for Emigrant is 226070319. They’ll then send two small deposits to your Emigrant Direct account (free 43 cents for me!) which show up in a couple days and you confirm them again back at ING. I just confirmed my deposits and they’re all linked up. I’ll also send a couple bucks back and forth to amuse/assure myself, but I think it’s a go.

HSBC Bank has had their no minimum, no fees Online Savings Account around for a while now, but this is the first time they have offered a better rate than Capital One 360, VirtualBank, or Emigrant Direct. I don’t have an account there, but it does have some nice features:

• Currently at 3.75% APY
• Open with $1, No minimums or monthly fees
• Online access and unlimited linked external accounts
• ATM card and withdrawal access through any ATM, deposits at HSBC ATMs only
• FDIC Insured, and HSBC is a major international bank.

[Read more…]

Short answer: No, not really, unless you are talking amounts over six figures.

I’ve seen so many people get hung up on this, I think it deserves a post. The easiest way to explain it is with an example. Let’s say ‘DaBank’ compounds interest daily on their accounts, and ‘MoBank’ compounds interest monthly. Let’s say you have a $10,000, 1-Year CD with both of them at the same 5% APR interest rate, and compare how much interest you have at the end of the year. Both credit interest monthly.

• Compare the rates of the Best Online Savings Accounts

MoBank:
Since MoBank compounds monthly, you are getting 5%/12 = .4166% every month. So, at the end of the first month, you will have 10,000 x 1.004166 = $10041.67. During the second month, you will be earning .4166% on $10041.67, not just $10,000. So at the end of the 2nd month you’ll have $10083.51, not $10083.34. This goes on for twelve months:

• $10,000 x (1 + .05/12)¹² = $10511.62.

DaBank:
Since DaBank compounds daily, you are getting 5%/365 = .0137% every day. So, at the end of the first day, you will have 10,000 x 1.000137 = $10001.37. Using the same basic formula as above for 365 days:

• $10,000 x (1 + .05/365)³⁶⁵ = $10,512.67.

So over the course of a year you’ve only earned $1.05 more by compounding daily versus compounding monthly!

The easy way to not even worry about this is to just compare APY instead of APR.

If you compare APYs, or annual percentage yield, the compounding effect is already taken into account, whether it be daily, monthly, or every 6.374 seconds.  In our example above, MoBank would advertise a 5.12% APY and DaBank could advertise a 5.13% APY, with the same 5% APR. I hope that clears things up for some!

Now, I know someone commented “How the heck do you keep track of all these bank accounts?” before, and I’m sorry I didn’t reply right away. Someone else asked again, so I got off my butt and whipped up a diagram to explain it. It’s not that bad, and it’s worth it get the best interest rate for my cash. First, I use Yodlee to track bank balances. This way I just log in to one site, and at a glance I can see balances and recent transactions. If I need more detail, then I can log into the respective bank websites. Yodlee also recently added access to Emigrant Direct, so that was nice.

Now to explain how I transfer money to and from these accounts, here is a picture. Please excuse my mad Microsoft Paint skillz.
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In addition to my seperate informational pages, I also put together this comparison chart with most of the critical points. For each bank name, I have linked the information page (for example: Emigrant Direct) that I made for it. The best value for each feature is bolded:

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Direct Link: http://www.presidential.com
Current APR: 4.75% APY
Interest Compounding: Compounded and credited on a monthly basis.
Minimum to open: $5,000
Minimum to avoid monthly service charge: $5,000
Other fees of note: None
Download formats available: .ofx/.qif/.csv files*
Number of external bank account links allowed: None
Routing Number: 255073345
Opening Bonuses: None
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Website: EmigrantDirect.com
Current APR: 5.05% APY
Interest Compounding: Compounded daily and credited monthly.
Minimum to open: $1
Minimum to avoid monthly service charge: None
Other fees of note: None
Download formats available: .ofx/.qfx/.csv files*
Number of external bank account links allowed: 4
Routing Number: 226070319
Opening Bonuses: $10-20
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Direct Link: http://www.virtualbank.com/bc_esav_virtual.asp
Current APR: 4.60% APY
Interest Compounding: Compounded daily and credited monthly.
Minimum to open: $100
Minimum to avoid monthly service charge: None.
Other fees of note: Close-out in first 90 days fee of $50.00 (No min, so just leave open for 90 days)
Download formats available: .ofx/.qif/.csv files²
Number of external bank account links allowed: 4
Routing Number: 067092200
Opening Bonuses: $20 referral bonus
[Read more…]