I read your post about getting a better rate on my savings account . Makes sense, but how can one verify that the bank is legitimate? I’d rather not just throw money at somewhere I’m not sure of.
PS Wachovia has really been making me angry with their tiny savings rates. Before I started to be so disgusted with them I had quite a bit of money in their bank. Makes me wonder how much money you have to have in there to get some respect.
A valid question for sure, and one I didn’t address is my previous post about online savings accounts. So how can one go about making sure their hard earned cash is safe?
The most important thing to look at, when selecting what bank you want to hold your savings account with, is verification that “bank x” is backed by the FDIC (Federal Deposit Insurance Corporation). Essentially, being backed by the FDIC means if bank x sucks at doing their job and they can’t afford to give you back your money, Uncle Sam will pay you back instead. If you put $10K in the bank and six months later they pull a WaMu, you will get all $10K back from the fed. I can’t stress this enough, being backed my the FDIC is uber important!
Do not sign up with a bank just because they have a phenomenal interest rate – chances are, if their interest is WAAAAY above competitors something fishy is going on -. If you put $10K in a bank that is not backed by the FDIC and that bank fails, then you are, how do we say… SCREWED! You probably will end up losing all of your hard earned money. Most banks advertise on their home page if they are FDIC insured (they know it is a huge selling point). If you have any doubts that the institution your looking in to may not be, you can always go here and verify.
As far as the interest rates go, I feel ya on getting some pretty crappy rates right now. When I opened my Countrywide Online Savings account I was earning a little over 3% on my money, less than a year later I’m earning a dismal 1.6%. I personally don’t chase interest rates. Sure there are banks out there that have better rates than mine, but it is hardly enough for me to go through the hassle of managing yet another account.
For example, say Joe Six Pack puts $20K in to a Countrywide account tomorrow and lets it sit for one year at 1.6%. At the end of the year Mr. Six Pack’s account balance would be $20,320. If you took that same $20K and put it Zions Bank (currently at 2.15% interest) and let it sit for one year, your balance would be $20,430. The Zions account earned you an extra $110 over the course of the year. For some, that extra $110 may be worth chasing, and if so good for them. Personally, I prefer picking a relatively solid performer and sticking with it (unless its rates are SEVERELY lower). I initially signed up with Zions Bank because they offered one of the highest interest rates in the country, but when I found out I had to physically mail in my deposits I quickly said “Peace Out Zions” (I prefer to do everything electronically).
As the title of this posts alludes, Redneck Bank is, as far as my research has shown, legitimately backed by the FDIC and a subsidiary of The Bank of the Witchitas. Although their 3.1% offer is enticing, I’ll stick to my countrywide account for now.
Anyone else have any interesting insight in to the online savings accounts?