The Wall Street Journal published an article today entitled Banks Wage Rate War for Deposit (subscription required).

For those of you who read BestCashCow, the article won't come as a surprise. It discusses how banks, strapped for deposits and fighting to maintain liquidity and prevent bank runs have had to raise rates to keep and attract deposit dollars, your dollars. Past BestCashCow articles on this include:

• How the Credit Crisis Wil Impact Your Interest rate - Jan 30, 2008
• Savings Rates Holding Up During Banking Crisis - Oct 15, 2008
• Savings Account and Certificate of Deposit (CD) Rate Analysis - Nov 7, 2008

From the WSJ article:

"Banks covet deposits because of this year's failures of IndyMac Bank, Washington Mutual Inc.'s banking operations and other institutions. Bank executives have been rattled by those seizures and the woes of beleaguered banks such as Wachovia Corp. and National City Corp., from which panicky customers yanked their money. Many lenders are now ratcheting up rates to shore up their deposits."

And:

"The desire to lure depositors is triggering a "national price war," says Michael Poulos, a partner at financial-services consulting firm Oliver Wyman. "In the past 15 years, there's been nothing like this. The level of competitive intensity is unprecedented right now."

Even though rates have held up well despite cuts in the Fed Funds Rate, BestCashCow data shows that they may have peaked and have declined from their high. Whether they continue to decline depends on whether the Fed cuts rates further and how much additional stress banks face in the next six months.

Below is an analysis of savings account rates compared to Certificates of Deposit.

Even if they do decline, I still expect that we'll see a premium over the Fed Funds rate for some time. The collapse of Wall Street is the collapse of a financial model that generated lots of cheap capital and liquidity. It fueled enormous bank and financial profits. But the model has been proven faulty and as banks go back to the basics - borrowing from consumers and lending out their money - they are going to have to pay more for our money.

Now, we'll see how long it takes for banks to begin offering toasters, televisions, and trips to Florida to get your cash. There is now more competition than ever for your money, and on BestCashCow we think that's a good thing. Make sure you are getting the highest rate.

Citigroup's stock fell below $10 in trading today. It is now trading at 10 year low. This does not look like a healthy bank to me and analysts are expecting another round of large losses when earnings are reported.

Amidst all of this, Citi is reportedly in talks to acquire Maryland based Chevy Chase bank. I guess as long as Chevy Chase's stock is also down it's a wash from a valuation standpoint. Still, one has to wonder about the wisdom of acquiring banks. Is that really what Citi should be focused on now? I don't know about you, but to me their stock chart looks an awful lot like several other banks that are no longer with us.

E Loan is offering a $25 bonus for opening their Savings Plus online account. To get the $25 you must use the promotion code "plus25" on the application and submitted before to December 18th, 2008. You must also deposit a minimum of $100 into the account and keep at least that balance for at least 60 days. That's a pretty low requirement.

Savings Plus accounts come with an interesting condition though. You must contribute a regular minimum amount each month in order to receive their highest rates. The minimum contribution is $100.

The rates on the Savings Plus account are pretty competitive. For balances between 10,000 and 24,999, the APY is 3.35%. The more money you deposit, the more you'll earn.

These rates compare to a top rate on the BestCashCow savings and money market rate table of 4% APY and a balance requirement of $1.

E-Loan is owned by Banco Popular North America and has a Bauer rating of 3 out of 5 stars. As with any bank, we advise you keep your deposit amount under FDIC limits.

• Check the best savings and money market rates