Although community banks are often overlooked, they can rival-ââ¬âand often exceed-ââ¬ânational banks in savings account interest rates.
Are you disappointed in the current interest rates offered by national banks for conventional savings accounts? The solution may be no further away than your local community bank. Like credit unions, many community banks are concerned with the needs of local customers and they invest in community development. Many community banks also have less restrictive lending practices and are willing to consider other factors such as character and family history before making decisions on loans.
While big banks such as Bank of America are currently offering interest rates as low as a 0.10% APY on regular savings accounts, many community banks are offering interest rates at 2.00 and above. In Pennsylvania, Dollar Bank is offering a 2.00% APY on balances below $20,000 for their FreeMONEY Savings Account if you have a Dollar Bank FreeMONEY Checking or e-Checking account.
Other community bank offers require a little more footwork. For example, the North Middlesex Savings Bank is currently offering a 2.25% APY for their Simply Save account. To earn the maximum interest rate, the account must have at least one $50 deposit posted during the interest cycle, but the deposit must be made in person at a banking branch. If you are a resident of that community, the savings interest rate may be worth a monthly trip to the bank.
The bottom line: never discount local banks while researching interest rates just because the bank doesn’t have a national presence. Some community banks do not allow people to submit applications unless they live in a community area, however, so always check with bank before completing your application.
For the best information on savings and money market account interest rates, click on the "Savings" tab above.
The financial strength of an insurance company should be an important consideration before you buy a policy. Hereââ¬â¢s why.
You may know the financial strength of your bank and of the companies in your stock portfolio, but do you know the financial strength of your home and auto insurance company? Economic instabilities can drastically affect a marginal company, and if there’s a catastrophic event that results in multiple policy claims, the financial strength of an insurance company may impact claim payments. Although insurance companies typically purchase reinsurance (a practice where portions of risk portfolios are transferred to another company to reduce the likelihood of having to pay a large obligation), if an insurance company has a bad financial rating, this can reduce their ability to obtain reinsurance. Additionally, if an insurance company goes insolvent, reinsurance doesn’t apply. This, in turn, can reduce their ability to pay you—the policyholder—when needed.
An insurance rating system, such as that developed by A.M. Best or Standard & Poor’s, analyzes the ability of insurance companies to meet its ongoing insurance policy and contract obligations. You should use extreme caution before signing up for insurance with any company rated “B” or below. That auto insurance policy company XYZ just quoted you may be 20% cheaper than any quote received from other companies, but what will that policy be worth if you have an accident and can’t get your insurance company to pay according to your contract?
You can register for a free basic subscription account at both A.M. Best and Standard & Poor's to research your insurance company’s financial strength. It’s always a good idea to check on your insurance company’s financial strength rating at least once a year, and always check out the rating before signing up for a new policy.
New Dominion Bank has recently returned to profitability, so what's behind a huge blow in their Bauer Financial rating?
New Dominion Direct is a bank which has just started a major new push into online banking, and offers some strong rates which rank among the most competitive in BestCashCow.com's savings chart and many categories in BestCashCow.com's CD charts. We therefore noticed immediately when Bauer Financial recently socked New Dominion Direct with a big drop in its rating, from a three and a half star rating to a two star rating. That is a pretty substantial drop, and even though Bauer only updates its rates every three months, an unusually large deterioration all at once.
What's driving this problem? New Dominion's first quarter report suggests it right from its first sentence. "Charlotte, N.C., May 10, 2010--New Dominion Bank today reported that it returned to profitability in the first quarter of 2010, as net interest margins widened while non-interest expenses and foreclosure-related losses declined from last year's peaks."
Since we know that Bauer ratings are driven by a series of ratios, it's easy to suggest that a bank that only recently became profitable again would get socked with some bad news in the ratios. Add to this a short-term cash flow issue evidenced by a cut in short-term interest payouts, which in turn encourages customers to put their money in longer-term issues that New Dominion won't have to pay out on any time soon, and what you're looking at is bad numbers today, but not necessarily tomorrow.
A big key is how badly New Dominion got hit by foreclosure losses--a year ago, they had ZERO foreclosure losses. But over the past two quarters that went to 1.67 million dollars, before trailing off to just this last quarter's count of $58,109, a huge drop from just a few months ago.
For their part, New Dominion's got a plan, going after non-interest expenses and loan volume to give them a better position. And indeed, it does seem like a short-term issue that may improve. Of course, New Dominion is an FDIC insured bank, meaning all deposits are insured by the federal government for up to two hundred and fifty thousand dollars. While the Bauer hit is a pretty substantial issue, deposits will be safe as long as they are careful to stay below FDIC limits.
