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Author: zskii Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2818  
Subject: Re: Quest for the Perfect Interest Rate Date: 6/29/2002 2:30 PM
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Paigerella,

Interest rates are great, but not everything. There are a few other monetary perks you can get from a bank, and I would encourage you to consider them.

Are you willing to bank long distance? There are a number of internet banks that have higher interest rates and lower fees. Generally, the lower the fee structure, the lower the interest rate will be, but as you've seen, that is certainly not the case with brick and mortar banks like Wells Fargo!

My favorite long distance bank is USAA Federal Savings Bank in San Antonio TX. It is owned by a mutual insurance company exclusively for military families, but anyone can bank there. The details:
* no minimum balance on checking or savings
* no fees on checking or savings
* ATM fee rebates - when you visit a non-USAA ATM (which would be all the time, since they only own about 10 ATM machines), they don't charge a fee, and will rebate whatever fee the other bank charges, up to $1.50 each time, 10 times a month
* Debit card rebates - use your check card and get 0.5% cash back on all your purchases, paid monthly.
* Interest: On checking, it is currently zero percent if your average balance is less than $1000 or a whopping 0.35% if your average balance is over $1000. On savings, it ranges from 0.5% on balances less than $1,000 to 1.61% on balances under $5,000 to 1.76% on balances less than $25,000 to 2.01% on balances over $25K. All are variable based on prevailing market interest rates.
* You can transfer funds to/from any bank in the US via their website. Also free.
* If you do need to deposit checks, they provide free postage paid pre-addressed envelopes with the postal service barcode already on them. Meaning - the envelopes get there pretty fast. 2 days from dallas, 2-3 days from across the country. Not only that, they don't dilly dally once they get the envelope - the deposit is posted right away.
* Free overdraft protection from the savings account, or from a USAA credit card
* By the way, a previous poster mentioned US Bank as a good source of student credit.... I would say USAA is one of the best sources of student credit - rate is currently 10%.
* Toll free service from about 7am to 10pm every day, and online service all the time, also free
* To get in touch with them, call 1-800-531-BANK. You can see their home page at www.usaa.com but if you're not in the military or related to a USAA member, you're not going to be able to get in until you call.

In conjunction with USAA, I use ING Direct (www.ingdirect.com) for my savings. They pay 3% interest, no minimum balance required. I keep $1000 in the USAA savings account to cover overdrafts. Funds are transfered in and out of their bank via their own website (or if I weren't so lazy I could set up my USAA account so that I could transfer funds using USAA).

I looked over the Safeway bank website, and it looks as though if you are able to ONLY use Safeway bank ATMs (to avoid non-Safeway fees) and don't use your check card often, Safeway is going to be your best bet, you're going to have a very hard time beating 3.5% interest right now.

Why? Most banks base their interest rates on what they are able to turn around and invest your money in safely. Right now, investments that are relatively secure pay very little, as their return is usually based on whatever the government pays on its loans plus a certain margain. To make the situation very simple, the Federal Reserve has currently set the federal funds rate at 1.75%, so you can see that getting a savings account that pays 3.5% is a pretty good deal!

Alternatively, if you use your check card quite often, using some combination of USAA and Safeway bank may be a good alternative for you. Since you can transfer funds between accounts very easily, you could keep a certain amount at USAA, visit whatever ATMs you want, and make money from your check card purchases. When you need to deposit checks, you could visit your friendly Safeway Bank, deposit the money into your savings account, and then, as needed, transfer it into your USAA account via the website.

Of course, there are a number of other banks that offer ATM rebates, and I would encourage you to check around. pcbanker.com, State Farm Bank, First Internet Bank of Indiana, and Bank of Internet all provide them; however, of the ones I've listed, only USAA doesn't require a minimum balance to avoid a fee.

-z
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