Friday, July 24, 2009

Money Markets and a Free HDTV

In last month's update, I mentioned a "new" bank called Ally Bank, which offered the highest money market rate of 2.05% APY. Ally has dropped out of the lead, and now ShoreBank Direct is on top. Like I said, there is no telling how long a particular rate will last. Anyway, it is worthwhile to consider moving your money into banks at the top of the list, especially if you are willing to open a new account.

Without further ado, here are the latest interest rates. Note that the rates are sorted by APY, and represent institutions that I have accounts at, or have otherwise mentioned in my blog:

2.05% Shorebank Direct Online High-Yield Savings
1.85% Ally Bank Online Savings
1.55% HSBCDirect Online Savings
1.40% Bank of America SavingsLink**
1.40% ING Direct Orange Savings
1.35% Umbrellabank Pot O' Gold Money Market
1.30% Citibank Ultimate Money
1.30% Citibank Ultimate Savings
1.00% Guaranty Bank Gold Rewards Money Market
0.95% E*TRADE Complete Savings
0.75% Chase (formerly WaMu) Online Savings
0.65% Western FCU Money Market
0.08% PayPal Money Market*

*Note that the PayPal Money Market fund is NOT FDIC insured.
**SavingsLink account is no longer offered to new customers.
Rates are believed to be accurate as of 7/23/09. I did not include banks that had special, or introductory rates in the list because they are not ongoing interest rates. I am also not including non-liquid accounts such as CD's in the list.

I was surprised to come across a bank offering a free 22" HD LCD TV or a Flip MinoHD Mini Camcorder to open a new bank account. This offer is from Irwin Union Bank to customers who open an 11-month CD with a minimum deposit of $20,000. The offer is also available to depositors who open certain business checking and business money market accounts. For reference, a 22" HDTV retails for about $250-300, and the Flip MinoHD sells for a bit less than that, so it is quite a generous gift considering how stingy banks are with interest rates these days.

The CD rate is dependent on your particular area, but where I am it is a respectable 1.72% (APY) interest. Indeed, that is better than what most banks offer on CD terms of less than one year. There appear to be a couple of downsides to the offer. The penalty for early withdrawal is substantial -- $500 plus 91 days of interest. That works out to about $600 if you need get your money out early. The other negative is that the bank states that it will report the value of the free gift to the IRS (on a 1099 form), so the free TV or camcorder could end up costing around $100 depending on your tax bracket.

I thought that the days banks offering a TV set to new customers was definitely a thing of the past. I don't know much about Irwin Union Bank except that they are FDIC insured, and based in Indiana. If anybody has any dealings with Irwin Bank, could you share your experiences here?


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