Banking questions - savings account

zubs_IHB

zubs_IHB

New member
I was wondering how come some savings account interest rates have higher interest rates than CD's.

I called my bank today and their savings account interest rate was 0.10% while their CD was 2.59% for 1 year.



Then I looked at my Etrade account and they are offering a savings account with 3.30% interest while their 1yr CD was 1.something%.



How can savings account have higher interest then a CD? CD's you have a penalty for withdrawing early, while savings account you can basically transfer it out anytime. Atleast that is how I understand it.



Thanks in advance for your answers.
 
Locking in 2.59% for a whole year might look pretty good if your savings account rate goes to 1.5% next month. Ties in to how uncertain banks are about the future (and how badly they need cash deposits). Shop around. I think I've seen CD rates in the 4% area for 6mos or a year.
 
[quote author="Daedalus" date=1229142521]Locking in 2.59% for a whole year might look pretty good if your savings account rate goes to 1.5% next month. Ties in to how uncertain banks are about the future (and how badly they need cash deposits). Shop around. I think I've seen CD rates in the 4% area for 6mos or a year.</blockquote>


Can you remember where?
 
Haven't verified the offer, but bankrate.com is showing GMAC 1-yr cds at just over 4%. There's another <a href="http://www.irvinehousingblog.com/forums/viewthread/2903/">thread </a>about best rates/places to park cash.
 
[quote author="zubs" date=1229139188]I was wondering how come some savings account interest rates have higher interest rates than CD's.

I called my bank today and their savings account interest rate was 0.10% while their CD was 2.59% for 1 year.



Then I looked at my Etrade account and they are offering a savings account with 3.30% interest while their 1yr CD was 1.something%.



How can savings account have higher interest then a CD? CD's you have a penalty for withdrawing early, while savings account you can basically transfer it out anytime. Atleast that is how I understand it.



Thanks in advance for your answers.</blockquote>


Etrade may pay whatever interest rate is necessary to gain savings account deposits. I would not deposit money in an Etrade account no matter the interest rate.
 
etrade is FDIC insured and I don't have that much money with them.

So what I got from this thread is that CD's guarantee the interest rate, while a savings account may change at anytime.



So Etrades 3.3% savings is good due to FDIC insurance, and I can move it in and out without penalty.

They may change the interest rates, but if they do, I can just move my money at that time.



FYI: here is their site for the savings rate.

<a href="https://us.etrade.com/e/t/welcome/completesavings">Etrade 3.3% savings account</a>



Also, how are they able to offer 3.3% when my normal bank only offers 0.10%...
 
Thanks for posting this thread. I was going to link you to the Citi ultimate savings because it used to be over 3.5% a couple of months ago. Now it's only 2.75% and I would never have known because they never tell you when they lower the rate.



Check this out for screwy cd rates:

3 mo 1.75%

4 mo 1.11

6 mo 3.0

7 mo 2.0

8 mo 1.11

9 mo 2.65

10 mo 1.11

12 mo 2.75

12 mo 2.0

30 mo 3.0

5yr 3.5



<a href="https://web.da-us.citibank.com/cgi-bin/citifi/scripts/prod_and_service/prod_serv_detail.jsp?BS_Id=CDRates&BV_UseBVCookie=yes">Citibank CD rates</a>
 
It doesnt matter which savings of checking vehicle you use now or what it pays. The Govt is getting lent money at 0% interest, sometimes negative interest, so all rates will hit 0% shortly. You might as well buy the Yen or something.
 
You must log in or register to reply here.
Back
Top