Five Online Savings Accounts and CD Accounts to Consider in February 2018

Five Online Savings Accounts and CD Accounts to Consider in February 2018

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

Rates are clearly going up now.  Whether you have extra cash that you are looking to move from a bank paying basically nothing or are removing money from a volatile stock market, here are some places to consider putting your money today. 

The great thing is that these five offerings is that they are all online offerings that enable you to make more on your money without getting off the couch.  However, you should note that some brick-and-mortar banks and credit unions are also becoming rate competitive.

Always check the best savings rates for local banks and credit unions where you live, and the best CD rates for local banks and credit unions where you live as you may find better rates there.

But, here are five very interesting online products.

1. Dollar Savings Direct, A Division of Emigrant – 1.60% Online Savings Account

Dollar Savings Direct is one of several Emigrant subsidiaries that we have seen over the last decade.  These days Dollar Savings Direct is their most aggressive savings account.  As savings rates increased in late 2017, Dollar Savings was always ahead of the curve, and while there are others who have now matched their rate, it seems like a safe bet to assume that they will continue to be aggressive as rates rise. 

Dollar Savings Direct has good user reviews on BestCashCow and we recently wrote about the bank here.  

2. Purepoint MUFG Union – 1.60% Online Savings Account

Purepoint entered the online banking arena in 2017, and while they have been slower to raise rates that many of their competitors, they recently catapulted their savings rate up to 1.60% provided you maintain a $10,000 balance.

Purepoint has good user reviews on BestCashCow (hyper: ) and stands out for the speed of their inbound and outbound ACH transfers.  We recently wrote about the bank here.  

3.  Live Oak Bank – 1.60% Online Savings Account

Live Oak is a new entrant to online banking.  This relatively small North Carolina bank has entered with a very aggressive online savings rate.  There are very few reviews on BestCashCow so far, and they are not universally great, but we think that the fact that they are aggressively courting new deposit accounts makes them worth a look for savings.

4. Live Oak Bank – 2.10% One-Year CD Account

As we wrote recently, we want to be pretty cautious about CDs in a rising rate environment, especially one where rates may now be poised to rise quite quickly.  But, if you are inclined to lock in for the next year, Live Oak has the best 1-year rate at the moment and their early withdrawal penalty on a 1-year CD is only 3 months’ interest.

5. Sallie Mae Bank – 2.00% 1-Year CD

Sallie Mae’s early withdrawal penalty on a one-year CD is also only 3 months’ interest.  There are user reviews on BestCashCow where users cite as an issue unduly long periods before money clears and is credited to their account.  However, if you open a CD funding it directly from an external account, you will begin earning interest on it immediately (and maturity will be one year from that date of opening), even though the principal may not have technically cleared. 

These are the places where we would look to put new money to work now.


What is the Difference Between A Savings Account And A Money Market Account?

What is the Difference Between A Savings Account And A Money Market Account?

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

Savings accounts and money market accounts are extremely similar account types.  In fact, they are so similar that BestCashCow lists them together.  Both are basic ways to stash cash while keeping it accessible (they are liquid accounts).   But that isn’t where the similarity ends - both savings and money markets are insured up to $250,000 by the Federal Deposit Insurance Corporation (or FDIC) at banks, or the National Credit Union Administration (or NCUA) at credit unions.

Most importantly, both savings and money market accounts pay interest – sometimes a high yield – and are therefore appropriate places to hold enough cash for a rainy day in any environment, and can be attractive places to hold cash versus stocks or bonds depending on your outlook for the economy.

Accountholders of both savings and money markets can avoid any sort of monthly fees for a very low minimum deposit (as low as zero).   See a list of the best online rates with the minimum amount necessary to avoid fees here.

Federal regulations may limit savings and money market accounts to six transfers per month (including internet, telephone, etc.), and no more than three of those can be by check, draft or debit card.  The account holder can make unlimited withdrawals by teller, ATM or by mail (or by ACH instituted from an external institution).

Where a money market account is different from a savings account is that it adds some of  the benefits of a checking account, enabling certain check writing services.   However, some banks automatically link high-yield savings accounts to matching checking accounts in order to provide the same service.   Regardless of whether you are opening a money market account, you may need a separate checking account to perform essential checking and bill payment services (see the best free checking account options here).

In short, we at BestCashCow do not believe that depositors need to be concerned at all about whether they are opening a savings account or a money market account. We think that depositors should look for the best rates and best service.  That can come from online banks or it can come from brick and mortar banks near you.

See the best online rates or see the best local rates near you.


A Leading Online Bank is Trying to Sell You Gold; Should You Bite?

A Leading Online Bank is Trying to Sell You Gold; Should You Bite?

Dollar Savings Direct, a division of Emigrant Bank, now offers depositors a competitive savings rate.   After a many year hiatus from the online savings market, Emigrant returns to a competitive position for a company that a decade ago was a pioneer in the online savings space.   It remains to be seen whether Emigrant intends to compete for the long-term in the savings and CD arena.  At various brief intervals, Emigrant – through Emigrant Direct, Dollar Savings Direct and My Savings Direct – has experimented with attracting depositors with a high rate only to drop the rate, sometimes quite precipitously, after a couple of months.

Since the market meltdown in 2009, Emigrant has also from time-to-time marketed distressed real estate to deposit customers that the bank had repossessed through a “real estate opportunities” link on some of their online banking websites.

Now Dollar Savings Direct (Emigrant) is selling gold. 

My personal opinion (no recommendations attached) is that this is a very interesting time to be buying gold.  I have never been a gold bug, but it seems to me that the only long term solution for the US to handle its debt is going to be to deflate the value of that debt over time.  Therefore, inflation and long-term US dollar rates will need to rise.  Likewise, the Trump Administration is prepared to engage in a trade war and to talk down the value of the USD, as Steven Mnuchin did in Davos this morning.  I am hesitant to invest in the British pound or the Euro in front of Brexit and the likelihood that the ECB will also race to devalue its currency.  I think that anyone investing for more than a couple of hours in emerging market currencies or bitcoin should have his or her head examined.  This leaves the shinny yellow metal as an interesting store of value versus the US dollar.

But, the Emigrant proposal just is not yet attractive.  While they will deliver the gold that you buy directly to you, most purchasers will opt instead to have them hold and store it for you.   Their storage fees, which are layered on top of their transaction fees, are 80 basis points a year.  80 basis points, especially compounded over any length of time, can really take a bite into any appreciation that you are looking to get in the asset (and the asset doesn’t produce any dividends or interest to offset it).

The SPDR Gold Trust (GLD) and the IShares Gold Trust (IAU) represent much more attractive alternatives with better liquidity (tradable any time that the market is open), potential tax advantages of an ETF, and much lower carrying charges.  These things aren’t small funds - one is over $36 billion and the other is almost $11 billion - and they are fully vetted by regulators of all sorts and by the media (Bob Pisani of CNBC, among others, went several years ago to see the vaults in London). 

I am not a fan of the 40 basis points that GLD charges and the 25 basis points that IAD charges (I think that Blackrock and State Street could charge much less), but these are still less than half of what Dollar Savings Direct or Emigrant are going to charge you to hold the bars for you.

It seems to me that Emigrant is trying to rescue a business model that may have been attractive in an earlier era, but that is largely obviated by ETFs (that of being a custodian for precious metals) on the backs of unsuspecting depositors attracted to their savings rates.