Bloomberg Article Says Bank Competition for Your Money is Insanity

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Bloomberg published an article today in which several analysts and bank execs said the rates being paid by some banks was insanity (way too high). I guess they haven't heard of competition or of the saying he/she who has the cash makes the rules.

Bloomberg published an article today in which analysts and bank executives said the rates being paid by some banks was insanity (way too high).  I say let's see higher rates.  Savers are finally getting some measure of respect for their money.

"“You have a whole raft of smaller banks out there, some of which are in difficulty, who are paying rates that are bordering on insanity,” James Wells, chief executive officer of SunTrust Banks Inc., said in a conference call with investors Nov. 13."

The article goes on to say that:

"A key reason regulators pushed Wachovia to sell was that they were screwing up deposit costs up and down the Eastern Seaboard,” said Tony Plath, a finance professor at the University of North Carolina at Charlotte. “A lot of hot money was moving into Wachovia and other banks that weren’t matching Wachovia were getting clobbered.”

Now, I don't know about you, but I think that high rates are a good thing.  One of the central premises of sites like BestCashCow is that bank competition is the only way for you to earn a fair return on your money.  In the article, Ken Lewis, CEO of Bank of America describes peer bank Wells Fargo as a "rational pricer," code language for providing very low rates.  Bank of America has never been know for their generous rates either.  Bankers hate high deposit rates because they lower their profit.  Of course Ken Lewis wants rates low.  It makes his job easier and makes it easier to pay for all of the high rise buildings BofA operates in Charlotte, Boston, NY, and San Francisco.  It makes it easier to pay for the Countrywide and Merrill Lynch acquisitions.

But our goal isn't to make it easier for bankers, it's to get the best return for our money so we can pay the rent, send our kids to college, and maybe retire.  Consumers, people like you and me should also be working to maximize our return. But the secret a lot of banks don't want you to know is that you can get a much higher return without any additional risk just by doing a bit of research.  Check out the savings, cd, and money market tables on BestCashCow or the deals on Bank Deals or the info on other financial sites.  If your money is earning a significantly lower return, then you should change banks.  Don't be fooled by the fancy marketing and branding campaigns.  And because the banks covered on this site (and on most of the others) are FDIC insured, you can change banks without any risk.  Your money is covered up to  FDIC limits whether you are earning 1.2% at Bank of America or 4% at a smaller Internet bank. 

So the choice is really yours.  Do you want to put money into all of those banker's pockets?  Or, would you rather do a bit of research and put the money into your own?


Venture Bank Direct Offering 3.8% APY Savings Account

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Venture Bank Direct is offering a competitive 3.8% APY savings account.

Venture Bank Direct, a relatively new entrant into the high yield savings game is offering a competitive 3.8% APY savings account.  This puts it into the top 5 savings account rates on the BestCashCow rate tables (November 17, 2008). 

I called to find out more about the account and learned that they have an all-electronic application process.  They authenticate users via several questions presumably pullled from your credit file.  This is standard procedure for an online applicatin.  Transferrring funds in and out can also be done electronically via ACH.  According to the customer service rep I spoke with, a hard pull is not done when applying for the account.

The company launched their online direct bank in August and they have had the 3.8% APY savings account since October 2.  According to the CSR, they "are not planning a rate change anytime soon."  That doesn't mean of course that they can't or won't lower the rate tomorrow but it's nice to hear them at least say they plan to keep rates steady for some time.

Venture Bank Direct is the online channel for Venture Bank.  Venture Bank has approximately $1.2 billion in assets and 18 financial centers in four western State of Washington counties.  The bank was established in 1979 as Lacey Bank and the Company was incorporated in 1983. It changed its name to First Community Bank in 1981 and in 2003 changed its name again to Venture Bank.

The bank has a 2 out of 5 star rating from Bauer Financial.  In its most recent filing with the SEC, the bank's President acknowledged that the bank has felt pressure from the declinking real estate market:

“We are feeling the effects of the real estate slowdown, which have affected virtually all banks”, said Ken Parsons, Chairman and CEO of Venture Financial Group. “The impact has been most pronounced with residential land development projects. Lot sales activity has slowed, putting pressure on developers’ cash flow, and in some areas impacting lot prices.”

Venture Bank and Venture Bank Direct are FDIC insured so as we recommend with all banks, stay below FDIC limits.

If anyone has experience opening an account at Venture Bank, please share your experience below.


E Loan Offering $25 to Open Online Savings Plus Account

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E Loan is offering a $25 bonus for opening an online savings account.

E Loan is offering a $25 bonus for opening their Savings Plus online account.  To get the $25 you must use the promotion code "plus25" on the application and submitted before to December 18th, 2008.  You must also deposit a minimum of $100 into the account and keep at least that balance for at least 60 days.  That's a pretty low requirement. 

Savings Plus accounts come with an interesting condition though.  You must contribute a regular minimum amount each month in order to receive their highest rates.  The minimum contribution is $100. 

The rates on the Savings Plus account are pretty competitive.  For balances between 10,000 and 24,999, the APY is 3.35%.  The more money you deposit, the more you'll earn.

$100,000 or Greater 3.85%
$50,000 to $99,999.99 3.75%
$25,000 to $49,999.99 3.51%

$10,000 to $24,999.99

These rates compare to a top rate on the BestCashCow savings and money market rate table of 4% APY and a balance requirement of $1. 

E-Loan is owned by Banco Popular North America and has a Bauer rating of 3 out of 5 stars.  As with any bank, we advise you keep your deposit amount under FDIC  limits.