October 2018 Update – Five Online Savings Accounts to Consider as Rates Rise

October 2018 Update – Five Online Savings Accounts to Consider as Rates Rise

Rate information contained on this page may have changed. Please find latest savings rates.

Following the Federal Reserve’s hike in the Fed Funds rate in September, we have seen interest rates of all durations move up in the first week in October.   Savings rates too have risen, causing the best rates in BestCashCow’s table of online rates to shuffle.

Here are 5 accounts you may want to consider:

  1. EBSB Direct – 2.50% savings account on balances over $5,000

EBSB Direct is the online banking division of East Boston Savings Bank and a familiar name to many who have followed the online deposit account space for the last few years.   The 2.50% savings rate is above other nationally available rates and is likely to remain competitive if the Fed raises interest rates again in December.  

EBSB Direct is playing a bit of a game with earlier depositors.  They remain in the “Money Market 3” account earning 1.80% unless they contact customer service and add new money to their account (this is something we don’t like).  On the plus side, EBSB Direct has great customer service according to its reviews on BestCashCow.  The 2.50% rate is good on deposits up to $1 million. While only the first $250,000 is covered by FDIC insurance, East Boston Savings Bank is a Massachusetts-chartered bank and a member of that State’s Depositors Insurance Fund (DIF) that insures balance above FDIC limits.  BestCashCow’s financial analysis shows that the bank is very sound.

Note: EBSB withdrew this offer on November 1, 2018.   It is no longer nationally available to new depositors.

  1. MySavingsDirect – 2.25% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank.   Emigrant operates three online divisions (MySavingsDirect, Dollar Savings Direct and Emigrant Direct).   Rather than raise the rates in all of the accounts as rates rise, Emigrant has developed a practice of only making their savings rates competitive in one division at a time.   As a result of this practice, customers are being forced to flip accounts in order to maintain market rates (Dollar Savings Direct’s rate seems to be stuck at 1.80% and Emigrant Direct’s rate is 0.50%) and these divisions end up with mixed reviews on BestCashCow (see here how frustrated Dollar Savings Direct customers became when they stopped raising rates).  

Emigrant’s practice is definitely something for new depositors to think about before opening an account.  As rates continue to rise in 2019, you can expect that you will need to move your assets out of MySavingsDirect in order to stay competitive.  That’s an OK strategy so long as you make a plan to check the latest online savings rates on BestCashCow frequently.   Emigrant’s divisions make accounts easy to open and fund (although you cannot link by ACH with all banks).

  1. Marcus – 1.95% Online Savings rate for balances over $1

Marcus has outstanding customer reviews and its lightening fast ACH transfers..  Since Marcus is part of Goldman Sachs, depositors, especially those inclined to deposit over FDIC limits, can always sleep well at night.   Importantly, as rates have risen through 2018, Marcus has proven  to be faster to raise rates than the other most recognized online banks (Amex, Barclays and Ally).  While it may not always sit on top of BestCashCow's online savings table (or those of our competitors), depositors with Marcus can anticipate that they will remain competitive, and know that they will be free from the games that the banks listed above may play.

Note: Marcus's savings rate has been raised to 2.05% at the end of the month.

Editor’s Note:  Marcus is an advertiser of BestCashCow.   Please read our Advertiser Disclosure here

  1. Citizens Access – 2.12% Savings Rate for balances over $5,000

Citizens Access is a recent addition to the online banking space with competitive CD products in addition to their online savings account.  The account is easy to open and it is the online banking division of a solid bank.   They entered the market over the summer of 2018 with a competitive 2.00% savings rate and were quick to raise their savings rate to 2.12% after the Federal Reserve moved in September 2018

Note: Citizens Access raised its online savings rate from 2.12% to 2.25% in the middle of October. 

  1. Purepoint – 2.15% Savings Rate for balances over $10,000

Purepoint is like CitizensAccess with a couple more years under its belt, a slightly higher rate at the moment, but also a higher minimum balance.  They should continue to be competitive and raise rates quickly as the Fed moves through 2018 and 2019.  MUFG Union Bank is Purepoint’s parent, and is itself owned by Mitsubishi UFJ Financial Group, one of the world’s largest banking groups.   Purepoint’s online portal is clearly aiming to attract people depositing millions.   While we strongly encourage depositors to stay within FDIC limits, BestCashCow’s analysis shows that the parent bank is financially sound.

Before opening an online savings or money market account, BestCashCow always urges depositors you to check local bank rates and local credit union rates.

Image: Copyright: BestCashCow

Morgan Stanley is Offering its Customers 2.10% on Savings or 2.40% on a 6-Month CD

Morgan Stanley is Offering its Customers 2.10% on Savings or 2.40% on a 6-Month CD

Rate information contained on this page may have changed. Please find latest savings rates.

Morgan Stanley is trying to get its large customer base to move some of their assets back to the bank from other institutions that may have offered better rates in the past.   They are doing this by offering an promotional savings rate of 2.10% or a 6-month CD rate of 2.40% so long as the capital is transferred from outside of Morgan Stanley.   These offers are available under December 7, 2018 and are subject to availability.  Certain conditions may apply.

Customers can deposit up to $2 million per product in each of two issuing subsidiaries – Morgan Stanley Bank, NA and Morgan Stanley Private Bank.   Each is separately FDIC insured.

The 2.10% savings rate is competitive versus online savings rates.    However, according to the terms of the offer, the rate will revert back to the non-promotional rate on March 1, 2019.

As of this publication, the 2.40% 6-month CD rate is above any nationally available online 6-month CD rate.  Locally available 6-month rates may be higher (check rates where you live here).

In the Spring, we suggested that these types of short-term promotional products offered by investment banks may become less attractive after depositors account for the loss of interest while transferring their money in (and presumably out, when the promotion ends).   You may also experience significant periods where your cash is sitting idle at the bank waiting for the bank’s next purchase date.   Read my earlier article here.  (

Additionally, the 6-month CD operates as a brokered CD, as cannot be made liquid with the payment of an early withdrawal penalty like most online CDs can so you better be awfully sure that you won’t need access to your money.  We’ve cautioned against brokered CDs many times (recently here) and you should be especially cautious in a rising interest rate environment like we are entering now.

Bottom line: You might be better off checking the best online savings rates here.

Image: Courtesy: Morgan Stanley

Federal Reserve Raises Fed Funds Target Rate to 2 - 2.25%

Federal Reserve Raises Fed Funds Target Rate to 2 - 2.25%

The Federal Reserve voted unanimously today to move the Federal Funds rate up by 25 basis points to 2 to 2.25%.

BestCashCow had predicted this move for some time.   By late last week, economists polled by various polling services had all moved to a position of over to 90% likelihood of this move.   It was very well telegraphed by Federal Reserve Chairman Jerome Powell. 

As a result of this move, we will see higher online savings rates.    You will also likely see more competitive local savings rates from banks and credit unions in your area.

We may also see a rise in CD rates, including online one-year CD rates and local one-year CD rates.

The Fed continues to be very hawkish.    We predict another rate move in December and several next year with 12 of 16 Fed members now forecasting this 4th hike for 2018.  

The Fed Funds’ long term target remains at 3.375% for 2020 and 2021.   Today, it raised its long-term "neutral" target to for years beyond 2021 to 3% from 2.90%.   Hence, we would continue to be very cautious about long-term CDs.

The Fed may need to move faster and harder than its now hawkish predictions.   Inflation is going to come as a result of Trump’s trade battles and China tariffs.   It isn’t just a premonition.  In fact, I saw a hawk today during my morning bike ride in Central Park.  In 20 years of riding my bike there, this was the first time seeing one on my morning ride.  It must mean something.  (He or she is shown on the picture).