October 2018 Update – Five Online Savings Accounts to Consider as Rates Rise

Following the Federal Reserve’s hike in the Fed Funds rate in September, we have seen interest rates of all durations move up in the first week in October. Savings rates too have risen, causing the best rates in BestCashCow’s table of online rates to shuffle.

Here are 5 accounts you may want to consider:

1. EBSB Direct – 2.50% savings account on balances over $5,000

EBSB Direct is the online banking division of East Boston Savings Bank and a familiar name to many who have followed the online deposit account space for the last few years. The 2.50% savings rate is above other nationally available rates and is likely to remain competitive if the Fed raises interest rates again in December.

EBSB Direct is playing a bit of a game with earlier depositors. They remain in the “Money Market 3” account earning 1.80% unless they contact customer service and add new money to their account (this is something we don’t like). On the plus side, EBSB Direct has great customer service according to its reviews on BestCashCow. The 2.50% rate is good on deposits up to $1 million. While only the first $250,000 is covered by FDIC insurance, East Boston Savings Bank is a Massachusetts-chartered bank and a member of that State’s Depositors Insurance Fund (DIF) that insures balance above FDIC limits. BestCashCow’s financial analysis shows that the bank is very sound.

Note: EBSB withdrew this offer on November 1, 2018. It is no longer nationally available to new depositors.

2. MySavingsDirect – 2.25% Savings Rate, No Minimum Balance

MySavingsDirect is a division of Emigrant Bank. Emigrant operates three online divisions (MySavingsDirect, Dollar Savings Direct and Emigrant Direct). Rather than raise the rates in all of the accounts as rates rise, Emigrant has developed a practice of only making their savings rates competitive in one division at a time. As a result of this practice, customers are being forced to flip accounts in order to maintain market rates (Dollar Savings Direct’s rate seems to be stuck at 1.80% and Emigrant Direct’s rate is 0.50%) and these divisions end up with mixed reviews on BestCashCow (see here how frustrated Dollar Savings Direct customers became when they stopped raising rates).

Emigrant’s practice is definitely something for new depositors to think about before opening an account. As rates continue to rise in 2019, you can expect that you will need to move your assets out of MySavingsDirect in order to stay competitive. That’s an OK strategy so long as you make a plan to check the latest online savings rates on BestCashCow frequently. Emigrant’s divisions make accounts easy to open and fund (although you cannot link by ACH with all banks).

3. Marcus – 1.95% Online Savings rate for balances over $1

Marcus has outstanding customer reviews and its lightening fast ACH transfers.. Since Marcus is part of Goldman Sachs, depositors, especially those inclined to deposit over FDIC limits, can always sleep well at night. Importantly, as rates have risen through 2018, Marcus has proven to be faster to raise rates than the other most recognized online banks (Amex, Barclays and Ally). While it may not always sit on top of BestCashCow's online savings table, depositors with Marcus can anticipate that they will remain competitive, and know that they will be free from the games that the banks listed above may play.

Note: Marcus's savings rate has been raised to 2.05% at the end of the month.

Editor’s Note: Marcus is an advertiser of BestCashCow. Please read our Advertiser Disclosure here.

4. Citizens Access – 2.12% Savings Rate for balances over $5,000

Citizens Access is a recent addition to the online banking space with competitive CD products in addition to their online savings account. The account is easy to open and it is the online banking division of a solid bank. They entered the market over the summer of 2018 with a competitive 2.00% savings rate and were quick to raise their savings rate to 2.12% after the Federal Reserve moved in September 2018.

Note: Citizens Access raised its online savings rate from 2.12% to 2.25% in the middle of October.

5. Purepoint – 2.15% Savings Rate for balances over $10,000

Purepoint is like CitizensAccess with a couple more years under its belt, a slightly higher rate at the moment, but also a higher minimum balance. They should continue to be competitive and raise rates quickly as the Fed moves through 2018 and 2019. MUFG Union Bank is Purepoint’s parent, and is itself owned by Mitsubishi UFJ Financial Group, one of the world’s largest banking groups. Purepoint’s online portal is clearly aiming to attract people depositing millions. While we strongly encourage depositors to stay within FDIC limits, BestCashCow’s analysis shows that the parent bank is financially sound.

Editor's Note: Purepoint ceased operations in 2022.

Before opening an online savings or money market account, BestCashCow always urges depositors you to check local bank rates and local credit union rates.