If you have a statement savings account, you'll probably need a magnifying glass to find the interest, according to Bankrate.com's semiannual survey. If you're one of the rapidly dwindling number of people who have a passbook account, you fared somewhat better, but it's still nothing to brag about.
Bankrate's spring 2007
survey of passbook and statement savings accounts offered by the five largest
banks and the five largest savings institutions in the nation's top 10 metropolitan
markets shows that the average yield on statement savings accounts dropped 8 basis
points to 0.46 percent. The average yield on passbook savings accounts shed
2 basis points to come in at 0.58 percent.
If you separate the banks from the
thrifts, or savings institutions, you'll find
significant differences in the amount of interest
they're willing to dish out to their customers.
Banks pay an average yield of 0.35 percent on
statement accounts and 0.44 percent on passbooks.
Statement accounts at savings banks average 0.57
percent, and passbooks average 0.71 percent.
Looking at the more popular statement
savings accounts, there are some notable differences
in yields among metro areas. For instance, statement
savings accounts in the Detroit area pay the most,
with an average yield of 0.71 percent. That's
due mainly to Dearborn Federal Savings Bank, which
pays 2.25 percent. Dallas ranks last with an average
yield of 0.35 percent.
performance for convenience
It's probably safe to say that most people who
have money in these accounts keep it there for
ultraconvenience. You can go online and instantly
transfer money between your checking account and
one of these savings accounts. That compares favorably
with the two or three days it may take to transfer
funds between your checking account and a high-yield
savings account at another institution. But is
it really worth the lost interest?
Check Bankrate.com's high-yield
money market and savings account database
and study the difference in yields. As of this
writing, AmTrust Direct is leading the pack with
a yield of 5.36 percent. There are 16 institutions
paying more than 5 percent on their savings or
money market accounts, and another half-dozen
are paying better than 4 percent.
If you plan ahead for your cash
needs, it's easy to work around the extra time
it may take to transfer money from one of these
accounts to your checking account, and it's certainly
For example, $2,000 sitting in a
savings bank account earning 0.71 percent yields
$14.20 in simple interest in one year. Even worse,
put that money in a regular bank paying the pitiful
average of 0.35 percent and you'll sock away $7
after a year. Switch to a high-yield account paying
5.36 percent and you'll add $107.20 to your account
If that's not enough to get you
to switch, think about the fact that your bank is probably lending your money
to you or someone else for a home equity line of credit at more than 8 percent,
or a new car at 7.7 percent, or a mortgage at 6.25 percent. That's how the banks