Wachovia's Way2Save program provides users with a 5% APY return on cash deposited into a savings account as well as a bonus of up to $300 dollars.
Wachovia's Way2Save program provides users with a 5% APY return on cash deposited into a savings account as well as a bonus of up to $300 dollars. That's pretty good. Sounds too good to be true, right? There is no catch but the program has some unique characteristics that won't appeal to everyone.
To participate in the program, you need to open a checking account and then a Way2Save savings accounts. Both of these accounts are free so there is no problem there.
Once you open the account, you can fund it in one of two ways.
$1 transfer from your checking account to your Way2Save account for each Check Card and electronic payment transaction. That is, every time you make a debit card transaction or pay a bill online, they will transfer a $1 from your linked checking account to your savings account. That means you have to have money in your checking account to transfer. The program is trying to automate your savings by matching the money you spend with $1 saved. Clever.
Recurring automatic transfer from your checking account to your Way2Save account, $100 maximum per calendar month. So the maximum you can directly deposit per month is $100, for a total annual amount of $1,200.
Interest Rate
The interest rate you ean on this money is currently pegged at 5% APY the first 12 months and then drops down to 2% APY for years 2 and 3. The rate is variable meaning it can be changed at any time.
Savings Bonus
Wachovia will also pay a bonus on the balance in the account at the end of each 12 month period. This bonus is:
Year 1 5% of the eligible balance, up to $300
Year 2 2% of the eligible balance, up to $300
Year 3 2% of the eligible balance, up to $300
So, if you manage to put $2,000 in the account between periodic transfers and $1 transaction transfers, Wachovia would provide a bonus of $100 at the end of the Year 1. You'd need $6000 in the account to receive the $300 maximum. That's 67 debit or bill pay transactions per month. It's a lot but I know people who do that many.
If you do have the level of activity, you can receive a 5% bonus from Wachovia and potentially receive 5% APY. In addition, it forces you to put some money away. That's not a bad program.
Indymac, one of the first banks to feel the impact of the credit crisis was purchased today by a consortium led by Dune Capital member Steve Munchin and hedge fund members John Paulson and Christopher Flowers. They agreed to inject $1.3 billion in cash into the bank.
Prior to the IndyMac failure on July 11, 2008, the bank relied heavily on higher cost, less stable, brokered deposits, as well as secured borrowings, to fund its operations and focused on stated income and other aggressively underwritten loans in areas with rapidly escalating home prices, particularly in California and Florida. Since the FDIC has operated the institution, it has restructured funding to focus on more stable core deposits and on improving the value of the loans.
IMB Management Holdings LP and the investor group will inject a substantial amount of capital into a newly formed thrift holding company, which will own and operate IndyMac Federal. IMB Management Holdings LP, has agreed to bring in an experienced senior management team
The agreement with IMB Management Holdings, LP is not the first time private equity firms have participated in acquiring failed institutions. In the early 1990s, the FDIC tapped private equity when it sold New Bank of New England and CrossLand Federal Savings Bank.
Indymac was once a rate leader. Today its savings rates and cd rates are moderately competitive. The new company intends to focus on growing the bank's core deposits so it remains to be seen if Indymac will increase its competitiveness. It is estimated that the FDIC spent between $8 - $9 billion to insure deposits in the bank. The deal values Indymac at about $13.9 billion.
The Fed today made a special exemption and allowed GMAC to become a bank holding company, giving it access to TARP funds. That means that GMAC bank customers do not have to worry about the parent company defaulting.
The Fed today made a special exemption and allowed GMAC to become a bank holding company, giving it access to TARP funds. Just last week, GMACs application to convert was denied by the FDIC n the grounds that it did not have enough capital. GMAC tried to sell bonds backed by auto loans but investors wouldn't bite, worried about the quality of the underlying loans and a surge in defaults by car buyers.
That means that GMAC bank customers do not have to worry about the hassle of the parent company defaulting. While the parent company was not a bank holding company, GMAC bank was and still is a bank and deposits were fully covered by FDIC insurance. The change in status of the parent company means extra stability for the bank and its depositors.
GMAC Bank has been extremely competitive with rates lately. It currently has the top 6 month, 1 year, 18 month, 2 year, and 3 year Certificates of Deposit rates. It will remain to be seen if the change in its parent company and the injection of TARP funds will lead it to lower its consumer deposit rates.
