Beating Broke

Personal Finance from the Broke Perspective

Emigrant Bank Announces 3.75% Dollar Savings Direct

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Emigrant Bank announced their newest high yield savings account today.  Called the Dollar Savings Direct account, it will pay out what they claim to be an industry high 3.75% on all balances over $1000. I believe that there is at least one account that pays higher than 3.75% and the WaMu account is paying out 3.75%.  Still, a pretty good rate that is hard to beat.

If the name Emigrant Bank starts ringing bells for you, it’s because they run the Emigrant Direct savings accounts.  The Emigrant Direct savings accounts are a no minimum account that currently are paying 3.00% on all balances.  Neither account charges any fees and link directly to your current checking account.

It’s beginning to look like the Online Savings market is starting to heat up again.  With the current financial turmoil, people are starting to look for the highest yield they can find.  And quickly overcoming any qualms they have on using a online account to do so.  It’s a good thing for savers.

Should We Be Worried About Bank Failures?

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The $752 million dollar Columbian Bank and Trust of Topeka was shut down on Friday.  It became the ninth such bank closure this year.  Compared to only 3 closures in 2007, that seems like an awful lot of closures.  But, should we be worried?

Not really.  With the implementation of the FDIC and NCUA, the Government has taken away a lot of the sting of a bank or credit union closure.  There’s still plenty of inconvienences, but the insurance has you covered for most losses.  Your account is insured for up to $100,000, and there are some circumstances where it could be more.  But keep $100,000 as the baseline to worry about.  As long as you have less than that amount, you have nothing to fear.  Your money is insured and relatively safe.  The only inconvience will be delays in getting to your money if your institution should fail.

Another thing to keep in mind is that having this many closures, while not normal, isn’t unheard of.  In 2002, the FDIC closed 10+ banks.  Those were most likely a result of a little too much enthusiasm lending to dot com startups instead of real estate loans, but the effect was the same.  And if you’re thinking that Credit Unions are safer than Banks, you’d probably be only slightly right.  There have been 8 credit union closures this year so far.

So, should we be worried about bank failures?  Maybe a little, but not enough to lose sleep over.  And banks and credit unions are still much safer than bundles of cash in your mattress or under the old oak in the back yard.