Sovereign Bank is offering a rich deal to those who are interested in opening their Premier Checking and Money Market Savings Accounts. They'll give you $150 and guarantee 1.5% APY for three months.

The deal is available to residents of the following states: ME, VT, NH, CT, RI, MA, NY, NJ, PA, MV, MD, DE, and District of Columbia.

In order to qualify for the $150 you must do the following:

• open a new Sovereign Premier Checking, Business Owner Premier Checking, Interest Checking, or Partnership Checking account by March 13, 2010, with a minimum opening deposit of $100;
• open a Premier Money Market Savings account or any Sovereign savings or money market savings account with a minimum opening deposit of $100 or already have a savings or money market savings account;
• enroll in Online Banking at account opening; (4) set up and receive one direct deposit within 60 days of opening your account;
• request a Sovereign Debit Card ("Debit Card") and make 5 Debit Card purchases within 60 days after you open your account.

In order to qualify for the 1.50% APY bonus rate, you must open a new Premier Checking account and open a new Premier Money Market Savings account by March 13, 2010. The bonus rate will apply for each day your balance is $10,000 to $499,999 and is guaranteed for 3 months from the date you open your account. If you have below $10,000 in the accounts, the rate goes down to .55% APY.

1.5% APY is competitive with some of the other best money market and savings account rates according to the BestCashCow rate tables.

Note that the Premier Checking/Money Market Savings has a combined minimum balance of $15,000 to avoid a $30 monthly fee. This is the Cadillac of Sovereign accounts and while the bonus is hefty, you'll need to keep a good amount of money in the account to make it worthwhile.

The cash if paid out within 75 days after opening the account, and it doesn't say that the account must stay open.

For more on this offer, click here.

Bank of America has a nice program called Museums On Us. It provides BofA debit card holders free entry to participating museums, zoos, science center, botanical gardens, etc. the first full weekend of every month. The offer is limited to the cardholder although some musems may throw in the entire family.

I checked a list of participating museums in the Boston-area and found several that looked interesting. For example, general admission to the Museum of Fine Arts is $20.00 per adult. Using a Bank of America debit card could save at least $40 if two adults go and both have debit cards.

Bank of America doesn't really have a debit card rewards program but instead has its Keep the Change program where debit card purchases are rounded to the nearest dollar and the difference is deposited into a savings account. If you are a museum-goer, then the Musems On Us program is a nice addition.

The two big news events over the last week were the Federal Open Market Committe statement, in which the Fed committed to keeping rates low for the foreseeable future and for kind've slowing its purchase of mortgage backed securties and President Obama's whopping $3.8 trillion budget.

The Fed, as it has for the last year, committed to keeping the Fed Funds rate pegged close to 0%. At the same time, the Fed said that it was beginning to slow its purchase of mortgage backed securities.

" To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets."

That's the way to sit on the fence.

I've been expecting mortgage rates to begin to rise with this announcement but the opposite has happened over the last month. After peaking at close to 5.2% in late December, mortgage rates have come down and are now once again below 5%. This is a gift for those that want to purchase or refinance a home.

Many still predict that as the Fed lays off the MBS juice, mortgage rates will begin to go higher.As I wrote last week, low rates are both a benefit and a boon. You'll have to decide if getting a low rate is worth the risk that your house will lose value once rates start to move up.

President Obama's budget is also front and center to our rate discussion. $3.8 trillion is a lot of money and the budget shortfall is expected to reach a record $1.6 trillion in 2010 with whopping deficits going out beyond the horizon. What does that mean? More issuance of Treasuries. Eventually the market will be flooded with US debt and unless corrective action is taken, which seems doubtful, we're all looking at longer-term interest rates.

Right now though, higher interest rates would be welcome news for the savers of the world.

CD and Savings Rates

Most savings and CD rates hit record lows last week. Average savings rates reached a new record low of 1.47% APY, down 4 basis point from 1.51% APY the previous week. Average one-year cd rates showed the largest drop, falling 10 basis points to 1.85% APY. Average three-year cd rates dropped four basis points to 2.63% APY. The only glimmer of good news were five-year CD rates which increased from 3.18% APY to 3.20% APY.

Like the Treasury yield, BestCashCow has developed its own yield ratio for deposit accounts (a short duration deposit account) and 3 year CDs. As the chart below shows, the yield has been on the rise and is currently at 1.16. This is the second highest reading since we began compating this data. The yield ratio continues to mimic the Treasury yield curve, which is low on the short end and rises on the long-end.

At this point it's still hard to recommend putting money into anything longer-term than a 12-month CD, especially with rising rate risk. CD laddering may be a good way to smooth out the return you receive from your CD portfolio. Several banks have come out with breakable CDs, that allow users to withdraw money penalty free, and still other banks are lowering the withdrawal penalty, as Ally Bank recently did, for removing money before maturity.