Money Blue Book

Review of SmartMoney Magazine’s Top Discount Brokerages Below

While I have written about the best online discount brokers in the past – reviewing what I believe to be the top brokerage companies out there for new stock and fund investors – it’s always good to check out what the financial experts have to say on the subject. For almost two decades now, the editors at SmartMoney Magazine have been reviewing and releasing their annual list of the best stock brokerage companies, thoroughly researching and comparing the candidates based on a variety of key competitive factors. For customers and broker firms alike, their award wining list is always a popular read.

In this year’s 17th annual broker survey, SmartMoney updated its ranked list of the best and worst brokers after conducting a variety of performance based tests and undercover research as well as reviewing the responses to surveys by the online brokerages themselves. As the folks at Smart Money remarked in this year’s review – “no detail was too small” – as they poked and prodded the various available trading tools and features, even going so far as to go incognito – calling customer support lines and posing as prospective brokerage customers, while jotting down comments in regards to the quality of the phone service they received. For new and seasoned investors, this list serves as an excellent jumping off point for those on the fence and not sure which investment broker to go with or to switch to. While the exact sequencing order of the rankings is always debatable, the list gives a great overview of who’s hot and who’s not in terms of touting the complete package in all facets. The table below is self explanatory, but I’ll comment on a few names that I feel merit some mentioning.

E-Trade Is Selected As the Best Overall Online Broker

To absolutely no one’s surprise (certainly not mine), E-trade was chosen as the top discount broker for year 2009 by SmartMoney. Ranked high in every category, with excellent customer service and an affordably low $9.99 commission structure to boot, the E-Trade brokerage company definitely deserves the top spot. One of the best features of E-Trade is its status as a true one-stop shopping destination for brokerage and online banking services. Along with its highly rated broker conveniences and extremely broad portfolio of mutual funds, stocks, bonds, and ETF’s to choose from, ETrade also offers a wide array of FDIC insured products with its highly recommended E-trade banking service, complete with high interest savings accounts and high yield certificates of deposit.

Special Offer: ETrade is currently offering 100 free trades for new customers.

TradeKing Remains A Solid and Legit Top Tier Brokerage

Despite dropping one spot down from its previous 2008 Smart Money ranking, TradeKing remains a consistently solid high performer. Compared to E-trade, Fidelity, and Charles Schwab – TradeKing offers the lowest commission fee rate by far at only $4.95 per trade. Only Just2Trade, SogoTrade, and Zecco Trading (with its free monthly stock trade deal) offer lower prices, albeit with much lower reputational scores. They only major downside with TradeKing is its lack of a fully developed and integrated online banking system for those who want their banking and brokerages services in one place. But those who simply want a deep discount broker that features a wide selection of extremely user-intuitive trading tools with an impeccable customer service reputation can’t go wrong with Trade King.

Results Of Smart Money’s 2009 Broker Survey (Rated On A Scale Of 5 Stars)

Compared to the previous year’s 2008 Smart Money rankings, this year’s 2009 broker survey featured top five results that stayed pretty much the same, albeit with a slight shuffling of the deck. In 2008, the top five in ranked order were E-Trade, Fidelity Investments, TradeKing, TD Ameritrade, and Charles Schwab. This year, Charles Schwab, with its new and improved website, hopped up from 5th place to beat out TradeKing and Ameritrade for the coveted 3rd place finish. Etrade and Fidelity, with their robust and huge mix of product offerings and funds remain solidly in 1st and 2nd place respectively. As the table above clearly demonstrates, with the top 5 brokers securely entrenched, the up and coming basement-dwelling brokerages still have quite a ways to go.

OptionsXpress – Excellent Online Tools, But Only Average Customer Service

As the Smart Money review noted, OptionsXpress rated well and received high marks for its online trading tools. However, the online brokerage retailer was docked points for providing only limited hours for phone based customer support. The editors also remarked of at least one instance where testers were put on hold for a longer than desired period of time when they called in for assistance. While OptionsExpress offers a large array of powerful investment analyzers and online technologies for stocks, futures, mutual funds, and bond trades that cater to savvy statistic-loving investors, its customer service offerings can still use some work

ShareBuilder (ING Direct) – Great Bank, But Brokerage Needs Improvement

Previously stuck at the bottom of the pile, ING Direct’s ShareBuilder discount brokerage firm has jumped up three spots after finally adding a large selection of mutual funds into its investment product lineup. However, its requirement of extra fees for access to premium research that other broker alternatives offer for free keeps it from advancing further in terms of ranking. Currently, one of ShareBuilder’s biggest selling points is its unique automatic investment feature, which allows online customers to buy stocks, mutual funds, and exchange traded funds (ETFs) on a regular basis so they can take advantage of dollar cost averaging as stock prices change and fluctuate over time. For now at least, ShareBuilder seems content in its marketing approach of appealing primarily to hands-off type investors looking for a low cost, almost automated brokerage solution without all of the added cost of having extra bells and whistles attached.

Zecco Trading – Free Trades Cater Only To Individual Stock and ETF Traders

Smack near the back of the bus is Zecco. You might won’t find Zecco at the top of any best brokerage list. In fact, the company is almost dead last on the list due to its lack of sophisticated fund selections or premium research material for investors – despite its unique reputation as a super deep discount commission fee provider. For now, the company seems all too comfortable nestled in its niche as a purveyor of free commission trades to those who who primarily dabble in individual stocks and ETF’s with little need for extraneous research material. While Zecco used to shine and dominate the deep discount brokerage market with its unlimited free stock trades, this deal now requires a minimum $25,000 balance to qualify for – and only for a recurring 10 free trades per month. Customer service has improved with faster response time, but I don’t think Zecco is going to be leapfrogging E-Trade, Fidelity, Charles Schwab, or TradeKing anytime soon.

Review Of Ally Bank.com’s High Yield Money Markets, Savings, and CD Offers

After a rather bumpy ride over the last few years, the financial institution formerly known as GMAC Bank is now Ally Bank. In mid-May 2009, the former financial lending and banking arm of General Motors took the first of what it hopes to be a series of reinvigorating steps towards distancing itself from the much criticized and tainted image of the now bankrupt auto maker.

Since then, many of you may haven noticed their recent aggressive purple-themed advertising blitz on TV spots and online ads. With the launch of Ally Bank, the company is undertaking a massive promotional effort to differentiate itself from the collectively damaged reputations of other struggling online banks in the hopes of  positioning itself as a commercial advocate of honesty, transparency, and accountability. Though the former bank has been struggling mightily in the midst of the worst economic recession and subprime mortgage crisis in decades, now that it’s flush with bailout funds courtesy of the federal government’s Troubled Asset Relief Program (TARP), the new Ally Bank is now sufficiently stabilized to concentrate on growing its depositor base and rebuilding its image.

Currently, Ally Bank’s interest rate offers are extraordinarily competitive and have been consistently dominating the high end of the bank rate spectrum. If you are willing to accept the view and belief (as you perhaps ought to) that the government’s FDIC insurance protections are more than adequate to guarantee the safety and security of your banking assets in the case of any unforeseen scenario, Ally Bank’s high interest account rates alone ought to be worth some measure of consideration. Whether Ally Bank’s quest to transform itself will be successful remains to be seen. However, in terms of the top rates alone, Ally ranks among the very best online banks, as you won’t find too many non-teaser rate offers that can match the consistency and aggressiveness of Ally Bank’s high interest deals. In terms of product lineup diversity, the bank also touts a few special banking products not readily found elsewhere – most notably, the Ally Bank No Penalty CD. Other offers include:

1. Online Savings Account – The high yield online savings account from Ally Bank earns a very high interest rate – much higher than other banks.
2. Money Market Account – With no account minimums and no monthly fees, the Ally Bank money market account offers versatile check writing and free ATM fee reimbursement privileges.
3. Classic CD – The classic fixed interest certificate of deposit from Ally Bank offers a variety of high yielding CD rates for different term limits, all with no minimum deposit requirements. Interest is compounded daily for maximum earnings.
4. No Penalty CD -  The highly coveted No Penalty CD from Ally Bank allows you to withdraw your money and put it anywhere, without the hassles or shortfalls of an early withdrawal penalty. This special CD offer has no fees of any kind and offers high fixed interest rates with no minimum deposit stipulations.

Ally Bank’s High Interest Rates – An Illusory Scam Or A Legitimate Offer?

Let’s focus on Ally Bank’s greatest and most dominant selling feature – its consistently favorable high yield savings account and CD rates. Despite the depressed state of interest rates across the board, Ally’s current rates have always remained one of the highest. Its perpetual financial issues have forced Ally to continuously offer very competitive interest rate yields to attract new account depositors. Interestingly, it’s these same perpetually high rates that have been recently raising the ire of competing banks, who via the American Banking Association (ABA) lobbying group have complained to the FDIC that the extraordinarily high deposit rates offered by Ally Bank are unfair due to its status as a recipient of subsidized federal taxpayer funds. Ally Bank has responded to the conflict by accusing the other banks of wanting to stifle competition to the detriment of consumers.

It may be a rather draconian way of looking at it, but I feel Ally Bank’s loss is our potential gain as prospective banking customers. Ally Bank’s continued desperation to acquire new deposits and stay sufficiently capitalized, and its willingness to continuously shell out the highest rates to accomplish this objective – is our potential windfall as interest rate seekers. For the foreseeable future, I don’t believe Ally Bank’s rates will plummet any time soon. So long as it continues to be closely monitored by federal government regulators and continues to stay aggressive in its ambitious plan to re-invent its brand, Ally Bank will continue to be a top tier destination for aggressive rate chasers. Let’s just hope the bank can ultimately turn things around and not meet the same failed fates as IndyMac Bank and Washington Mutual.

Ally Bank’s Quest To Build A Better Bank – With No Minimum Deposits, No Fees, No Minimum Balances, and Improved Customer Service

So what’s your personal take on Ally Bank’s recent name change from GMAC Financial to Ally? Great decision to rename itself and shed the tainted reputation of its former self – or merely putting lipstick on a pig as some people have put it? Personally, as a former long standing GMAC Bank customer, I’m extremely pleased that Ally Bank’s decision to overhaul itself included a major name change. While a name change in of itself isn’t capable of changing the corporate culture or altering the pre-existing way of doing things, at the very least it’s a significant gesture that the bank is trying to go in a different direction.

Hoping to improve its relationship with customers and usher in honesty and openness, the new Ally Bank has rewritten its explanations of financial terms in very simple language, curtailed much of its former usage of disclaimers, and pretty much done away with old school tactics such as implementing introductory teaser rates, monthly fees, and minimum deposit requirements. With these changes, the bank has also tweaked its best product features to make them more attractive. Currently, you’ll find that Ally Bank sits at the top or near the top of all ranked reviews of the best money markets, the best high yield savings accounts, and the best CD rates for everything from 6 month to 12 month certificates of deposit. The savings account and CD rates that Ally Bank touts is frequently many times over the national average – topping even the offerings of the best online banks.

Ally Bank has also drastically overhauled its customer service system – installing and heavily promoting its laudable 24 hour, 7 days a week customer service accessibility. In fact, this improved feature is pretty much plastered everywhere on the new Ally Bank website. To test out Ally Bank’s new customer service improvements, I purposely called a few times at weird hours of the night and a few times during office hours. In response to my cadre of banking questions, I received pretty targeted and courteous answers (something I don’t always get from more established banks like Citibank). Of course, despite the company’s financial difficulties in the past, the former GMAC Bank’s customer service reputation has always been generally well regarded in most editorial reviews. Here a quick run through of Ally Bank’s best new features:

1. Promise of the Best Rates: Ally Bank has indicated that it is committed to consistently offering the best savings products featuring the best rates. Historically, the former GMAC Bank has delivered, and at present is still delivering on this promise.
2. No Fake Teaser Rates: Ally Bank states that it will no longer be offering introductory “bait and switch” teaser rates that start very high but later crash. Let’s hope Ally can indeed keep those rates perpetually high.
3. No Minimums: There are no more minimum deposits or minimum balances required at Ally Bank. Feel free to open a new account with a whopping $0.00
4. No Sneaky Disclaimers: More transparency on rates and terms along with less usage of confusing legalese and jargon.
5. No Penalty CDs With No Strings Attached: One of Ally Bank’s best new features is the no withdrawal penalty certificate of deposit. Customers can withdraw funds prior to the maturity date without paying a fee and transfer the funds to any account at any bank without penalty charge.
6. Sleeping Money Alerts: In an effort to encourage customers to continuously seek out higher rates, Ally Bank will send out notices to customers when funds have been idle and could be earning a higher rate of return.
7. 24/7 Customer Service: Ally Bank now offers around the clock 24 hour, 7 days a week access to a live call center agent for customer assistance help. Just dial (1-877-247-ALLY)

Full FDIC Insurance Limit Protection With Ally Bank Up To $250,000

If you are like many of the high interest rate seekers out there drawn to the new Ally Bank because of its exceptionally high rates, you ought to be mindful of the online bank’s viability issues and ability to stay operational. Despite the name change, Ally Bank is still the same struggling GMAC Bank, at least until its aggressive marketing allows it to snag more customer deposits and become better capitalized. Until then, the possibility of an Ally Bank failure is always a real and serious concern.

But fortunately, like most reputable banks out there, Ally Bank accounts are fully insured and guaranteed by the United States government’s FDIC insurance – confirmed as FDIC certificate 57803. Based on recent changes with FDIC regulations, bank account deposits at FDIC insured banks are now insured up to $250,000 through December 31, 2013. With FDIC insurance, your Ally Bank savings and CD accounts are completely shielded from loss and backed by the full faith and credit of the federal government to be safe in the event of any unforeseen banking collapse. So long as you stay within the $250,000 FDIC limits, irregardless of what happens to Ally Bank, there really is no need to be nervous – your assets are fully protected. If you are unsure about putting your money into the hands of a newly renamed bank with a past, there are plenty of other highly rated banks to choose from – albeit touting rates that aren’t as lucrative or as high as that offered by Ally Bank.

Extra Information and Resource

• Ally Bank ABA/Routing Number for direct deposits and ACH transfers: 124003116
• Ally Bank Customer Phone Number: 1-877-247-2559 for 24/7 assistance
• Ally Bank E-mail: customercare@ally.com

News Update: AllyBank.com Is the New Financial Face Of GMAC Bank

As of mid-May 2009, GMAC Bank is now officially called Ally Bank. With a new aggressive marketing blitz on cable TV channels and via Internet ads, the new purple themed Ally Bank is embarking on a quest to rebrand its image and change the public’s perception of its former beleaguered self. Touting the new banking persona as a new and better type of bank – an ally and friend to consumer customers of sorts, AllyBank.com’s new banking slogan is – “No minimum deposits. No monthly fees. No minimum balance. No sneaky disclaimers.”

Sporting a very impressive array of high yield savings accounts, money market accounts, and high interest CD rates, Ally Bank is hoping to win the public over with its dazzling new message and cache of revamped services. Looking back at its history, the bank formerly known as GMAC Bank has certainly had quite a rough and tumultuous ride to get to where it is today.

Ally Bank – Starting Anew With A Fresh New Name and Top Tier Rates

For those not in the know, Ally Bank used to be GMAC Bank, a bank built on the troubled and rather shaky foundations of GMAC Financial Services – the banking, savings, and financial lending arm of currently bankrupt American vehicle manufacturer General Motors (GM). Originally established as a lending authority to provide automotive financing loans to car buyers and auto dealerships of GM brand vehicles, GMAC has been hit particularly hard by the housing crisis and subprime mortgage meltdown. The resulting economic recession, coupled with surging unemployment rates and the collapse of consumer spending, which in turn has had a significantly negative impact on automobile purchases – have all severely hit the company’s bottom line, pushing it to the abysmal financial brink.

On the verge of collapse, GMAC Financial was one of many financial institutions that ultimately converted itself from a loan issuer and servicer into a new bank holding company (dubbed GMAC Bank) to make itself eligible for the federal government’s infamous taxpayer-funded Troubled Asset Relief Program (also known as TARP). But saddled under the burden of its toxic cache of bad lending decisions and struggling under the weight of its subprime home mortgage loans, not to mention the operational losses of billions of dollars, the converted GMAC Bank has since embarked on a rather valiant but desperate quest to save itself by building a new reputation as a legitimate deposit institution. To start anew and completely re-design its banking image, in the middle of May 2009, GMAC Bank dropped its own namesake moniker from its brand, officially changing its name to Ally Bank in order to shed the reputational baggage of its former connections. Only time will tell whether the newly minted Ally Bank’s ambitious plans will prosper and succeed.

For now at least, Ally Bank remains one of the top online banks in terms of offering the best high interest savings account deals and high yield CD rate offers – pretty much continuing where GMAC bank left off. Despite its troubles, GMAC had always offered top interest rates for its banking products – and Ally Bank appears to be no different in this positive regard. Due mostly to its ambitious plans to establish itself as a leading and reputable provider of high interest banking products, if I had to project – I would wager that Ally Bank rates will likely stay perpetually high for quite some time. In terms of motivation to keep existing rates at their highest market peaks, Ally Bank’s shaky past actually works in the favor of prospective consumers. Desperate to capture the attention of skeptical new customers and convince them into becoming loyal bank depositors, Ally Bank is likely going to have to keep its interest rates high to achieve its lofty new business acquisition and retention goals.

Ally Bank.com’s New and Impressive High Interest Banking Products

Along with the notable name change, Ally Bank has also significantly improved its banking website and modified its product offerings to comport with the new and improved image. The company has made drastic upgrades to its customer service features – now offering zero wait time, 24 hours, 7 days a week telephone customer support (1-877-247-ALLY) – boldly plastering this new convenient feature on every page of its online banking website.

As the new name is supposed to conjure up images of a neighborly local credit union that’s genuinely in tune with the needs of its customers, Ally Bank’s former features and previous limitations have been re-worked and re-tooled to offer up a seemingly better banking experience. Eager to re-brand itself as an honest, straightforward, and transparent bank, the folks at Ally Bank have completely done away with all minimum deposit requirements, monthly fees, and minimum account balance charges. New Ally Bank customers are now free to deposit as little or as much as they wish into their new online savings or CDs, as all account deposits now enjoy the maximum interest rate offered regardless of balance. Here are some of the new and very compelling bank deals and offers from Ally:

1. Online Savings Account – The high yield online savings account from Ally Bank earns a very high APY rate – much higher than its competitors.
2. Money Market Account – With no account minimums and no monthly fees, the Ally Bank money market account with check writing privileges can be opened with as little as $1.
3. Classic CD – The classic fixed interest certificate of deposit from Ally Bank with automatic renewal features is a high yielding CD with no monthly fees and no minimum deposit requirements. The CD account compounds interest daily for maximum rate earnings.
4. No Penalty CD – The new and unique No Penalty CD offer from Ally Bank allows you to withdraw your money and put it anywhere, without the hassles or shortfalls of an early withdrawal penalty fee. This special CD account has no fees of any kind and offers high fixed rates with no minimum deposit requirements.

FDIC Insurance Guarantees and Protects Ally Bank Customers From Loss

If you remain unsure and uneasy about the safety and security of money deposited with Ally Bank – you’re not alone. Despite the name change, Ally Bank is still essentially the same embattled GMAC Bank, but with a new shiny purple colored exterior and improved marching orders. Those who are concerned about the safety of their money in the event of a major run on the bank have good reason to be worried. Bank failures and financial instability are serious issues in this day and age, as several major banking institutions like IndyMac Bank and Washington Mutual have poignantly demonstrated in the past few months.

Fortunately, Ally Bank deposits are fully insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum coverage limits. FDIC insurance currently insures all of Ally Bank’s certificate of deposit options, online savings accounts, and money market accounts up to $250,000 per depositor. Per recent changes with FDIC regulations, bank account deposits at FDIC insured institutions are now insured up to $250,000 through December 31, 2013. With FDIC insurance, your savings and accounts are completely guaranteed by the full faith and credit of the United States government to be safe from loss and protected in the event of any catastrophic banking failure or bankruptcy. So long as you stay within those limits, you will be fine.

As a former GMAC Bank customer myself, I woke up one day to find that my accounts had been converted over to the new Ally Bank. The conversion was surprising but not unwelcome as I rather like the new and improved features. As my new Ally Bank savings account rates have remained high and stayed the same, I have little to complain about. But don’t take my word for it – if you are interested in Ally Bank, visit their new website at AllyBank.com and check it out for yourself.

For a more in depth critique and assessment of the newly renamed GMAC Bank, you may want to read my detailed Ally Bank review. Feel free to share your experiences and thoughts!

If you have a high yield savings account or have funds invested in a certificate of deposit, no doubt you will have noticed that interest rates on formerly high yielding bank deposits have been dropping for months now. Thanks to this ongoing economic recession, interest rates have been steadily declining, much to the frustration and chagrin of aggressive savers like myself. While certain faithful online banks such as Ally Bank (formerly GMAC Bank) and Everbank continue to offer competitive rates that are as high as the market place will permit, the vast majority of bank rates have plummeted across the board. With many so-called “high yield savings rates” now only offering rates in the 1-2% APY range, it’s getting more and more difficult for any serious cash investor or fixed interest rate chaser to make money on existing balances while remaining in these types of declining accounts.

While high yield savings accounts and CD deposits (with their formidable FDIC insurance guarantees of up to $250,000 and steady rates of return) will continue to serve important and irreplaceable roles as reliable short term cash savings options for consumers, those seeking a higher rate of return may want to start looking elsewhere. Despite this type of depressed market, a variety of rather compelling CD alternatives have emerged as serious high interest contenders, all worth a review.

High Yield CD Rate Alternatives May Not Be Fully FDIC Insured, But Many Still Offer Safety, Security, Liquidity, and Low Risk Opportunities

Before you decide to move away from traditional bank savings and CD accounts, it’s important to think about how much additional risk you are willing to assume in your new short term savings vehicle. If you want maximum protection from loss and want absolute peace of mind, then it’s best to stick with your existing flexible savings accounts and CDs, albeit at current unimpressive rates. But if you are willing to harbor slightly more risk or give up some liquidity (degree of immediate access to your money), investing in financial products such as peer to peer loans (as a lender) or money market funds may enable you to get a much higher rate of return, while still enjoying a historically proven track record of safety. But keep in mind that the potential returns on such savings alternatives like mutual funds, bonds, and p2p loans are higher because the account holder is agreeing to assume more risk than one would with a bank savings account or CD. Such alternatives do not get the same iron clad FDIC insurance protection of up to $250,000 that all reputable banks in the United States enjoy. FDIC insurance via the federal government ensures your bank based checking, savings, and CD accounts won’t be lost even in the event of a catastrophic bank failure or bankruptcy. While some of the high interest rate alternatives like credit unions and brokerage accounts still afford account holders a measure of protection against unexpected loss with their equivalent versions of the FDIC, not all such alternative investments do.

Please keep the risk, liquidity, and interest rate tensions in mind as you review the potential possibilities below in your pursuit of higher interest rate deals and offers. Stay away from much riskier and more potentially volatile investments like stocks, mutual funds, index funds, foreign currency CD deposit accounts, and gold investments. While these are great investment assets for portfolio diversification purposes, when it comes to savings account alternatives and comparables, you ought to stick with steady deposit options where the risk of loss can be greatly minimized and controlled.

List Of the Best CD Rate and High Interest Savings Account Alternatives:

1) Peer To Peer Lending High Yield Rates – If you’re searching for a way to earn a fairly steady average rate of return in excess of 9.05% APY, you may want to consider investing money with popular peer to peer online lending sites like Lending Club (see review). Lending Club.com’s online application is free and it doesn’t cost anything to sign up and review the online platform features for yourself. Social network lending, also known as P2P lending, offers a way for ordinary and willing consumers to lend money to cash strapped borrowers and local entrepreneurs at competitive interest rates. While the lending website administers the actual loaning process and handles the fees and charges with the borrower, it’s the consumer lenders like you and I who get to pocket the potentially high yield interest rate earnings. While per my review, Lending Club.com is one of the few P2P lending sites today that’s actually undergone and completed the SEC filing and quiet period process, other up and coming social lending alternatives include Prosper.com, PertuityDirect.com, GreenNote.com, VirginMoney.com, and Loanio.com.

While unlike savings accounts and CD rates, P2P lending loans provided by sites like Lending club are not FDIC insured or absolutely protected from loss, average interest rate yields have averaged over 9.00% APY over the past 18 months. Because as a prospective social loan investor you get to decide the quality of the personal loans you wish to extend, it’s possible to diversify your risk among numerous small loan accounts and vastly minimize your risk of loss. Much of this was learned from my own personal experience. As a Lending Club loan investor and participant for more than a year now, I have more than $1,000 invested into several high quality loans (loans acquired by borrowers with high FICO credit scores and trouble-free credit reports). My annual interest rate across all of my outstanding note investment have consistently earned me a steady 8.00% APY, with no defaults as of yet.

While I wouldn’t recommend plunging one’s entire life savings, emergency funds, or new home deposit, into Lending Club or peer loan investments, from a high yield savings account investor stand point, the potential interest rates they offer are rather compelling. The whole practice of social micro lending is still not fully in the eyes of the mainstream media yet, but this CD alternative is likely to grow in popularity in the coming years.

2) Online Savings Account Rates (Become An Aggressive Interest Rate Chaser) – Online savings accounts, high yield reward checking accounts, and certificate of deposit accounts offer something that no non-bank alternative can match – and that’s solid FDIC insurance protection from loss up to the $250,000 per account limit. If you’re determined to stick with the top online savings accounts due to the FDIC protections, high liquidity, and ease of transferability that they afford, you may wish to consider being more aggressive in your approach towards bank rate chasing. Aggressive interest rate chasers usually open more than a few (10+) high yield direct accounts with the top online banks, and monitor interest rate changes and fluctuations closely (almost obsessively) for the best deals. When there is a noticeable interest rate shift, aggressive bank rate chasers will quickly take advantage of free ACH features to execute an electronic bank transfer in pursuit of the higher rate account. Of course, when all rate offerings across the board are in the doldrums like they are now, this rate chasing strategy doesn’t always make sense. The hope for many is to simply capture those special limited time rate promotions by online banks looking for a surge in customer deposits and willing to entice with extraordinary rate offers.

3) CD Rates (Consider Longer Term CD Rate Offers) – Chasing higher fixed CD rates require banking consumers to sacrifice liquidity in exchange for higher potential interest yields. The basic premise behind certificate of deposit rates is that they offer progressively higher rates the longer you are willing to forgo access to your deposited funds. The longer the CD account term, the more interest rate money the bank is willing to provide you in exchange. Take the high yield Ally Bank CD rates for example. Their best saving account rates are currently around 2.25% APY, while their best 1 year classic CD’s are offering 2.80% APY. Extend the CD term to 2 years, and the CD rate jumps to 2.90%. Extend the CD deposit term even higher to 5 years, and the interest rate surges to 3.50% APY. If you truly want to maximize your CD rate yield, you will have to consider longer duration CD terms such as 3 or 5 year CD’s over short term 12 month ones.

Those rate chasers seeking to capture the high interest returns of longer term multi-year CD deposits can inject some liquidity into their fund accessibility by adopting the ever popular and highly touted staggered CD ladder strategy. Another way to maintain some liquidity but still earn high CD rates with longer term accounts is to look into a no penalty certificate of deposit such as the ones that Ally Bank and other online banking institutions provide. No Penalty CD’s offer high CD rates with the freedom of no-fee early withdrawal. Also, look out for frequent online promotions and special CD deals by up and coming online or local banks looking to snag new accounts and time deposit customers. Those special CD rate deals they tout frequently are 2 to 3 interest rate percentages above and beyond current market rates.

4) Credit Unions and Local Community Banks – While online banks (”Direct” banks) generally offer much better interest rates than traditional brick and mortar banks due to their substantially lower overhead costs, you can frequently find exceptional and even exclusive banking deals by going local. While local credit unions and neighborhood banks often have limited bank branch locations and access, they compensate for their smaller presence by touting checking, CD, and savings account rates that are as good or even better than those offered by the best online banks. But keep in mind, oftentimes, local credit unions and banks like SECU, Navy Federal, PenFed (Pentagon Federal Credit Union) cater to specific segments of the community such as teacher’s unions, state or federal government employees, public or private university employees, or members of the military – and thus often have stricter bank membership and account qualification requirements. But despite the extra hoop jumping and limited membership demands, the bank rate deals they dangle are worth it if you can find them and qualify. Best of all, credit union accounts are protected from loss by the National Credit Union Administration (NCUA), an FDIC insurance-like entity.

5) High Yield Checking Account Rates (Reward Checking) – While high yield reward checking account rates have steadily declined the way savings and CD rates have, they remain much higher than even the best long term CD rates, frequently as high as double the top rates. However, most of these high interest checking accounts have several major account limitations and drawbacks. They frequently have stringent debit card usage requirements (at least 10 debit card transactions per month), and they usually cap checking account balances at a maximum of around $25,000 (although maximums as high as $250,000 can still be found). Balances are permitted in excess of the maximum limit, but only the funds within those limits will earn the highest special checking account rates. While I highly recommend taking advantage of reward checking account rates, I do recognize that they can be cumbersome alternatives for some consumers – primarily due to their strict debit card usage requirements. If you are a big credit card user like myself, being compelled to use a debit card to make a sizable number of monthly purchases can be a big burden.

6) High Yield Money Market Account Rates – If you wish to remain a high yield savings account rate chaser, you might as well take a look at high yield money market accounts as well. Essentially, money market accounts, or MMA’s as they are frequently called, are hybrid mixtures of checking accounts and savings accounts. While offering the high competitive rates of savings accounts, they also offer the check writing benefits of traditional checking accounts. MMA rates will rarely blow you away or wow you with their interest rate yields, but many local credit unions and online banks like EverBank have been pushing special high interest promotions for their money market offerings of late.

7) U.S. Treasury Bills, Notes, and Savings Bonds – Backed by the full faith and credit of the United States government, federal government-issued Treasury Bills and Savings Bonds enjoy rock solid protection against loss and forfeiture. Treasury Notes and Bonds are debt obligations issued by the U.S. federal government. The revenue generated from the bonds are used to raise capital income to pay for the federal government’s routine operations and expenses. Because of the lack of default risk, Treasuries typically offer lower interest rates than most other forms of securities, however the longer term notes and bonds offer pretty impressive rates that may sometimes match or even exceed ordinary bank rates. With their FDIC-like protections, Treasuries are worth a look. Check out TreasuryDirect.com for your Treasury security needs – it’s the only official financial website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form. But before you buy, remember to consider the liquidity issues and wisdom of locking up your money into long term Treasuries.

8) Consider Paying Off Credit Card Debt - If you are sitting on top of some idle cash or mulling what to do with the extra funds in your savings account that’s not earning the high yield interest rate you’d like, how about using the extra money to pay off some high interest debt, especially credit card debt if you have any. Besides, unless you’ve got a ton of cash in those savings accounts, chances are, an extra few interest rate points earned by shifting them into alternative investment vehicles isn’t really going to net you all that much in extra savings anyway. You might as well put it towards paying off debt like your high APR credit card balances, home mortgage obligations, or even your student loans. Don’t abandon the need to maintain at least 9 months – 12 months worth of emergency funds in your stable savings accounts and CDs, but using available funds to pay off presumably higher interest debt is always a good decision.

Please let me know of any more good deposit alternatives other than savings accounts and CD’s that offer higher rates but still offer a reasonably comparable level of safety.