DollarSavingsDirect's savings rate finally succumbed to gravity as the bank cut its rate from 4% APY to 3.5% APY. That rate is still significantly above the BestCashCow savings rate average of 2.99% APY.
As the graph below shows, DollarSavingsDirect bucked the decrease in overall rates since mid-October. Even though it has dropped its rate by half a percentage points, it's still well above the average of the top bank savings rates in the US and is now third on the BestCashCow rate tables.
Will it stay at the top of the rate tables? History suggests it might not. DollarSavingsDirect was started by Emigrant Bank, the parent of another online bank EmigrantDirect.com. As we discussed in an earlier article on the launch of DollarSavings, it was odd that the company started another online brand. The motive seemed to be a desire to not have to reprice the rates of all of the deposit money sitting in EmigrantDirect. The biggest difference between the two online divisions other than rate is the $1,000 minimum balance requirement for DollarSavingsDirect. Emigrant Direct as a $1 minimum balance.
In general, DollarSavingsDirect has received favorable reviews for the ease of its account opening process (see comments at bottom of linked article).
Whether DollarSavingsDirect cuts its rate further depends on its need for deposits and the competitive environment. Several other banks that offer savings rates include Clear Sky Accounts at 3.75% APY, Bank of Internet at 3.51% APY, and CNB Bank Direct at 3.5% APY.
Time will tell if DollarSavings remains competitive but as we've seen in the past, when one bank decides to cut rates, other banks are ready to move up to the top.
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DollarSavingsDirect Offers 16 Month CD at 4% APY by BankMan - Dec 03, 2008
Dollar Savings Direct / Emigrant Starts to List Its Foreclosed Homes on Its Online Banking Site by JRodgers - Aug 25, 2009
MetLife Bank - High CD, Savings, and Money Market Rates by BankMan - Jan 08, 2009.
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