First, the good news. In its nearly 15 years, BestCashCow has very seldom had to deal with this issue. As the reviews across the site indicate, most people have outstanding experiences with the major online banks. For the most part, across the last decade and half, customers opening savings accounts and CD accounts at these banks experience outstanding service and find rates that enable them to grow their nest eggs faster through compounding at higher rates.

And, the same is generally true of lesser known local banks and credit unions. While we see reviews that are less than generous every day, the thrust of most complaints across all banks relate to long wait times, slow transfer speeds, small unexpected fees here and there (that are often removed), websites timing out, etc. These complaints rarely relate to banks engaging in tactics designed to nickel and dime customers.

And, we do occasionally grapple with banks purporting both to be online and accepting customers nationally, but that really aren’t either. If we learn that a bank is in fact only equipped to accept new customers in its home area or state, we restrict the listing so that it only appears in those places.

The more challenging determination is when a bank does offer all its online services to customers nationally, but does not treat all its customers fairly or in the manner expected of an online bank, but rather seems to go out of its way to rip them off. On only two occasions have we had to deal with this kind of scenario. And, unfortunately, both of those cases are occurring right now (one is a repeat offender).

The first case is that of Brio Direct. Brio Direct is a recent new entrant in the online banking space and is owned by Sterling National Bank. As we have learned from comments on this bank, Sterling is much maligned in New York for a taxi medallion scheme that it is purported to have engaged in with Michael Cohen to systematically defraud the taxi drivers of New York (and hence the City of New York and the State of New York). More importantly, Brio Direct, according to our site viewers, has a policy of taking large and small deposits and holding them for long periods without interest on both inbound and outbound transfers. Not only is this well documented in comments on BestCashCow, but our employees have also experienced this in their own accounts and have confirmed this questionable policy directly with the bank.

The second case is that on Salem Five Direct, the online banking division of Boston’s Salem Five Cent Bank. Salem Five has been around for some time and years ago engaged in a policy of (a) quietly slipping in undisclosed $6 charges for each outbound ACH transfer, and (b) lowering the interest given to existing customers to a rate that is well below that indicated for new customers online (only to then increase it if the customer contacted the bank to complain). These practices were deemed so deceptive that the Florida Office of Financial Regulation contacted BestCashCow and asked us not to list Salem Five Direct in our online savings tables. While we concurred at the time, we have put them back on our lists years later after the bank committed to us that it had changed these practices. However, a comment left on the site yesterday, that we have verified as being authentic, indicates that both deceptive practices have resumed.

Brio Direct and Salem Five Direct practices are especially troubling as these banks are both offering savings rates that are among the most competitive offered nationally at the moment. It would be easy to remove both banks (Salem Five Direct again) from BestCashCow’s online savings tables. But, that would go against BestCashCow’s mission to provide users with the most comprehensive list of online savings rates in the country. Therefore, we have opted to continue to list these banks, but to alert users of other user experiences with these practices in our online savings table. And, through our user comments, those on BestCashCow can easily learn more about the practices of both banks through customers’ own experiences (both banks are now rated 1 star and there are now over 20 comments about Brio’s practices).

While we have left the listings on BestCashCow, we have, however, now advised our affiliates to remove these listings without adequate disclosures. Some affiliates, including RatesAndInfo.com have chosen not to list these banks’ savings rates, but continue to list their CD rates as long as the practices do not extend to those products. We support such a solution where full disclosure cannot be made.

I often speak to bank executives who are pursuing capital with the goal of bringing in large deposit volumes and who are setting their rate strategies. These folks will tell me that they are trying to avoid “fast cash”. In other words, they do not want depositors that will come only for the rate and leave as soon as they find a higher rate. My advice to these bankers is always that if they want their asset base to be more permanent, they should offer competitive CD rates as well as savings rates, and they should keep their savings rate competitive and not launch a huge campaign to advertise a great rate, only to later quietly lower it to a rate that is not competitive.

My advice to depositors is likewise pretty simple. If you have an online savings account or a local savings account that is not competitive or no longer competitive, you should consider moving your assets to one that is. By regularly checking online rates and local rates at BestCashCow.com, you can ensure that your money is compounding at the highest rate available over time.

In any environment, depositors need to consider the opportunity costs of moving cash from one savings account to another. You will always loose a day or two of interest getting your money out of an account through an ACH transfer, and may lose more if ACH is not available. Then your money may sit at a hub account paying only nominal interest that you hold (like Morgan Stanley or Merrill or Bank of America or Wells Fargo) for a day or two before you can get it transferred again. And, then by the time your money is earning the higher rate, it may no longer be the higher rate.

In a declining rate environment – like the current one – the opportunity costs of moving cash from one account to another may be lower, but you run the risk that the bank that you are moving your money to will shortly be lowering its rates too.

This, in fact, is what happened to me. I held a maturing one-year CD at a major online bank at 2.85% APY. Rather than allow the CD to renew at 2.00% or to keep the principal at that bank earning 1.70%, I decided to move it to a local bank near me that was still paying 2.00% APY on savings. However, by the time I finally got the money deposited in that bank, it had actually lowered its rate below 1.70%, causing me to have to move the money back to the bank where I had held the CD. In the end, I had lost almost a week’s worth of interest.

This strategy, of course, makes sense if you are chasing a higher CD rate and have locked in a rate by beginning the application process before you begin to transfer your money, but it just does not make sense for money that you have allocated to savings only. Read my recent article discussing whether to lock money in short-term CDs here.

The moral of the story here is that you cannot fight falling savings rates, but you sure can lose interest trying.

Think very carefully about your opportunity costs and about the direction of rates generally before you chase a few more basis points at another bank. You are often better off leaving your money where it is.

January 2020 ended with more than enough headlines to scare anyone into cash. Between Coronavirus spreading in China and the possibility that it may be a generation before the U.S. has a president not named Trump, there is a lot to be scared about. Friday, January 31 saw the Dow drop 600 points and the S&P go down by 58.

Just because you are moving to cash doesn’t mean you have to sit by and take any rate offered.

Most of the major online banks have recently lowered their rates, as the Fed has lowered its rate, to 1.70%. Since that rate still lies on the top end of the Fed Funds target rate of 1.50% to 1.75%, we think a 1.70% APY in an online savings account is fair. It just isn’t the best you can do.

Here are five ways to beat that rate:

First, as of February 1, 2020, BestCashCow shows several online savings rates above 2.00% and many more that are close to 2.00%. Some of these are new entrants and some of these banks have held their rates at or above the best savings rates for a while. In particular, Fitness Bank is offering 2.20% for those who are active (or looking to become active), and CFG Bank is still offering 2.15% in their online savings account.

Second, consider savings rates at local banks and credit unions near you.

Third, you may want to look to short-term CDs with that money in excess of that you require to maintain your liquidity. Many one-year CDs are still being offered above 2.00%, and they will protect you from the possibility of further declines in the savings rate as we work our way through 2020. Read this article for more of my thoughts on short-term CDs here.

Fourth, consider one-year CD rates at local banks and credit unions near you.

Fifth, if all else fails and you find earning so little in interest to be upsetting, infuriating, etc., this could be a good time to consider depositing money with a bank that pays you in American Airlines AAdvantage miles instead of interest. You can learn more about Bask Bank's AAdvantage miles-earning account here.

Have a great month!