Interesting Money

(Rates may be out-dated. Please see the Current APY Wiki for updates)

As much as I hoped against it, I knew it was inevitable. Yesterday E-Trade dropped their savings account rate from 5.05% to 4.70% APY. My heart sank about 35 basis points.

Of course, the rate dropped only one week after I moved the bulk of my savings there from FNBO Direct. This now puts me in a quandary of sorts – what (if anything) should I do with this money? Here are some options:

• Just leave the money in E-Trade, earning 4.70% APY.
• Push the money back to FNBO Direct, currently earning 5.05% APY.
• “Chase” a higher rate by opening a new account elsewhere, such as Indymac, Countrywide, or iGoBanking. Of course, who knows when their rates might drop?
• Other?

My first inclination was to “push” the money back to FNBO. The irony here is that of all my currently-owned savings accounts, FNBO is my most hated. They also have the highest yield. The thought of giving my money back to them gives me the shivers.

Opening another savings account to “chase” a rate is tempting, but is it worth the effort? For instance, iGoBanking is currently offering 5.17% APY, and Countrywide offers an impressive 5.50% APY ($10,000 minimum deposit), though the latter’s exposure to the sub-prime housing market makes me hesitant. Plus, either company could drop rates at any time, nullifying the effects of rate chasing.

Financial Simplification?

I currently have five on-line savings accounts. While I currently don’t mind maintaining them by logging in each month and adding the interest to ClearCheckbook, I’m considering “settling down.”

Since I already own mutual funds with Vanguard, I might give up the rate-chasing game and simply move my savings into a Money Market Fund at Vanguard. I’m currently eying the Prime Money Market Fund, with a current compound yield of 5.09%. Of course, the yield can fluctuate on a Money Market, but should stay competitive.

Naturally, I have more research and investigation to do, but the thought of logging into one site to manipulate my entire financial life sounds awfully tempting right now!

If any of you have made a similar move, I would love to hear your thoughts on it.