Review Of Dollar Savings Direct High Yield Savings Account

Published 1/9/09 (Modified 3/22/11)
By MoneyBlueBook

Review Of Dollar Savings Direct High Yield Savings Account

If you've been in the market for a high interest savings bank and have been searching for the highest interest rate offers, you may have come across an unfamiliar online savings bank called Dollar Savings Direct. It's no wonder few people have heard about Dollar Savings Direct - for many months since its establishment, the online savings bank has been operating under the shadows of its more established and well known divisional cousins - Emigrant Direct and Emigrant Savings Bank.

Until about a year ago, Dollar Savings Direct used to be known as BancoFortuna - Emigrant Savings Bank's attempt at launching a Spanish language bank to deepen its foothold into the Hispanic and Latino online banking market. Promoting its BancoFortuna.com website and touting a very high annual percentage yield (APY) interest rate on new accounts, Banco Fortuna was intended to appeal to U.S. consumers in the Spanish speaking demographic. After many months, it was ultimately evident and clear that the online bank's venture into the U.S. Spanish speaking market wasn't as successful as the bank had planned or hoped. Ultimately, and months into the foray, Emigrant re-branded Banco Fortuna into a new but familiar English based service - establishing a new bank named Dollar Savings Direct. If you visit the old BancoFortuna.com website today, you are automatically redirected to Dollar Savings Direct, confirming the change in marketing approach. While still a relative upstart, Dollar Savings Direct has recently begun to garner some success and much attention with its attractive high interest rate promotions, rates frequently much higher than those offered by the industry's current top online banks.

Difference Between A Dollar Savings Direct Account Vs. An Emigrant Direct Savings Account

When I first learned the published news that Emigrant Bank was promoting a new high yield savings bank in Dollar Savings Direct, I initially surmised Emigrant was sneakily trying to recruit more savings account deposits and game the market by not having to pay the higher interest rate to their existing Emigrant Direct American Dream Savings Account customers. In the world of consumer marketing, companies and product manufacturers frequently promote identical products in different packaged and advertised forms to appeal to different demographic segments. However, that didn't appear to be the case with Dollar Savings Direct, as the new bank's establishment appeared to be due to its previously unproductive foray into the Spanish market rather than a veiled attempt to garner new deposits at a discount.

However, while perhaps it wasn't Emigrant Bank's original intent to promote Dollar Savings Direct and Emigrant Direct as mere clones of each other, the end result was that they are essentially that - mirror images of each other. The one thing that new Dollar Savings Direct website visitors and account customers will immediately notice is that in almost every material way, Dollar Savings Direct and Emigrant Direct Bank are nearly identical. Other than a few cosmetic and aesthetic differences between the two in terms of different logos and graphics (such as Dollar Savings Direct featuring Benjamin Franklin as their mascot and Emigrant Direct featuring a red white and blue patriotic top hat), the two banks share nearly identical layouts and color schemes. This obviously shouldn't come as a surprise to anyone since both Dollar Savings Direct and Emigrant Direct have always been owned and operated as banking divisions by parent company Emigrant Savings Bank, except now Dollar Savings Direct is being brought into the English language fold as well.

While Dollar Savings Direct appears to have all the primary features of Emigrant Direct, there are a few important and key differences with Dollar Savings Direct - namely a much higher APY interest rate for new account customers and a $1,000 minimum balance requirement for the highest APY offer. While there is a $1,000 initial balance requirement to open new accounts, there are no maintenance charges or monthly fees for failing to maintain a certain account balance. A $1,000 minimum balance is required to earn the highest interest rate, but even if your balance falls below $1,000, you still earn interest at 1% APY. While this is noticeably different from Emigrant Direct in that the Emigrant savings account doesn't require a minimum balance to maintain the highest rate, the Emigrant Direct account offers an interest rate yield that is significantly less than that offered by Dollar Savings Direct. Of course, the one important thing to keep in mind is that all savings account interest rates, whether offered by Dollar Savings Direct, Emigrant Direct, or any of the top online banks in the market, are all variable in nature and therefore subject to periodic increases and decreases as market forces and national interest rates dictate. If you are interested in avoiding the variable nature of bank rate fluctuations, you may want to consider locking yourself into a fixed high CD rate with a certificate of deposit instead.

Can Existing Emigrant Direct Customers Get The New Dollar Savings Direct Interest Rate?

Frankly, I'm a bit perplexed as to why Emigrant chose not to combine Dollar Savings Direct with Emigrant Direct and let all of its aggregate customers enjoy the higher Dollar Savings Direct interest rate without additional effort. But regardless of Emigrant's reasons for not joining the two nearly identical online banks, current Emigrant Direct savings account customers can certainly reap the interest rate yields of Emigrant's new Dollar Savings Account. However, while the two banks operate under the same FDIC insurance certificate, they are still considered two separate banks. Thus, as an existing Emigrant customer, you will still need to open a new Dollar Savings Direct account to get the higher interest rate that Dollar Savings Direct is currently offering. Furthermore, since the two banks are regarded as separate financial institutions, to transfer funds between the two high interest savings accounts, you'll still need to use the services of a third party intermediary checking account.

Despite the hassle of having to open a new account to get the higher rate for what's apparently a bank clone of what you already have, if you are a current Emigrant Direct customer, you should still do what any smart and savvy bank interest rate chaser would do - open a new Dollar Savings account immediately to snag the interest income benefits of a higher rate. The process of opening a new Dollar Savings Direct online account is actually pretty quick and hassle free. Not only that, since Dollar Savings Direct only performs a soft credit check during the new account opening process, there is also no need to worry about any possible damage to one's FICO credit score.

Opening A New Dollar Savings Direct Account - No Hidden Fees

The process of opening a new savings account with DollarSavingsDirect is very straightforward and efficiently quick. Simply visit the Dollar Savings Direct application page and follow the directions by filling in the requested information. While the bank account has no minimum balance requirement to earn interest income on deposits, it does require a minimum initial deposit of $1,000 to open a new savings account. So long as you maintain a minimum balance of $1,000, you'll earn interest income at the highest APY rate offered. If the balance dips below $1,000, you'll still earn interest, except it'll be at a lower rate - just 1.00% APY. Otherwise, there are no hidden costs, no fees, no penalties, and no service charges for inactivity. As you are filling out the online application, you will be required to provide the following personal and identifying information:

  • Your name, address, birth date, and contact telephone number
  • Your Social Security Number (SSN)
  • Your driver's license number
  • Electronic funding information (bank's routing and account numbers)

To finalize the application process once you've provided the necessary account information, you'll need to fund it. Funding your new Dollar Savings Direct account can be made online via an ACH electronic bank transfer from a linked checking or savings account. Before your linked external bank can be used for funding purposes, you'll need to verify ownership of the account through a series of test trial deposits. Dollar Savings Direct will automatically make two small trial deposits into your funding account, a process which usually takes a few days. Once you've received the two test deposits, simply return to your Dollar Savings Account and submit the dollar amounts to complete the initial bank fund transfer and begin banking online. For electronic deposits, Dollar Savings Direct mandates a 5 business day holding period before funds can be withdrawn. Once your Dollar Savings Direct account has been set up with initial funds transferred in, you are free to start banking online via the 24/7 access website. Feel free to transfer funds in and out of your linked up bank account as needed.

Bank Safety, Stability, and FDIC Insurance Coverage Of $250,000

One of the biggest and most serious concerns that many bank consumers have these days when choosing a bank is the ability of the company to stay in business. In this current poor economic climate amidst the shadow of multiple fallen banks, many of us are understandably concerned about the safety and security of our bank accounts in the event of an unpredictable financial catastrophe or bank failure. The high interest rate appeal of high yield savings accounts are alluring, but just how stable and safe are financial institutions like Dollar Savings Direct Bank?

For starters, Dollar Savings Direct is merely an online division of its much larger parent company Emigrant Savings Bank. While for promotional purposes, Dollar Savings Direct and Emigrant Direct seemingly operate independently, they both operate under the same FDIC insurance certificate (FDIC Certificate: 12054). Established during the mid 1800's, Emigrant Bank is the oldest savings bank in New York City and by some accounts, the largest privately owned bank in the United States. With assets in excess of $14 billion, its primary bank branches thrive in the heavily competitive New York metro area - all traits indicative of an aged and established banking institution.

While certain financial pundits place great weight on a particular banking institution's ability to garner high ranks on Bankrate.com's Safe & Sound Ratings or Bauer Financial's star based rankings, I prefer to recommend a greater attention to FDIC insurance limits instead. Emigrant is a FDIC insured bank and thus its checking, savings, and CD deposit accounts are fully backed by the full faith and credit of the United States government up to the current full FDIC coverage limit of $250,000 for each customer. Both shared Emigrant divisions of DollarSavingsDirect and EmigrantDirect have been fully FDIC insured since the 1930's. Unless the U.S. government somehow gets annihilated off the face of the planet or winds up in such complete financial disarray that it can no longer sustain its obligations (not very likely), your Dollar Savings Direct funds are safely protected and guaranteed from loss. As a Dollar Savings Direct customer myself with a modest amount sitting in a high yield savings account accruing interest income, I rest easy at night, as I know my deposits are fully secure. However, do keep in mind that because Emigrant Direct and Dollar Savings Direct are online banking divisions of Emigrant Bank that share the same FDIC certificate, any deposits you have at Emigrant Bank, Emigrant Direct, or Dollar Savings Direct are aggregated and FDIC insured up to a single combined limit of $250,000 per depositor.

Extra Information and Resource:

  • Dollar Savings Direct ABA/Routing Number for direct deposits and ACH transfers: 226070403

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36 Responses to “Review Of Dollar Savings Direct High Yield Savings Account” 

  1. Tim says:

    Normally, banks do not charge for ACH transfers. Dollar does not - you would need to verify with Chase, but it would be unusual for them to.

  2. Geoff says:

    Great..thanks Tim!

  3. Geoff says:

    I called Chase and was told that they charge $3 per transaction for ACH transfers.

    Over time...that can add up!!

    What banks do not charge a fee for ACH transfers?

    Thanks!

  4. Tim says:

    I use ING, Wachovia (now Wells Fargo) and a small local bank - none of them have an ACH fee. I highly recommend ING - I do my electronic bill pay from them and have had zero issues. They pay a reasonable rate and have a well designed site. You can do everything EXCEPT write 'real' checks. I've had an ING 'Electric Orange' account for almost 2 years.

  5. Erik says:

    Check out the best rates on short term deposits at select community banks from CheckingFinder. All of the community banks listed below accept nationwide applications . Community banks continue to offer higher yields on short term deposits to serve as economic engines.

    Bank of Ripley - Ripley, TN 5.26
    Keystone Bank - Auburn, AL 5.15
    Connexus Credit Union - Wausau, WI 5.15
    Altra Federal Credit Union 5.05
    Community Bank of Pleasant Hill - Pleasant Hill, MO 5.01
    Olmsted National Bank - Rochester, MN 5.01
    Malvern Federal Savings Bank - Paoli, PA 5.01
    Community Bank of Raymore - Raymore, MO 5.01
    Royal Banks of Missouri - St. Louis, MO 4.78
    Focus Bank - Charleston, MO 4.51
    Liberty Bank - Alton, IL 4.5
    First Arkansas Bank & Trust - Jacksonville, AR 4.44
    First Arkansas Bank & Trust - Jacksonville, AR 4.44
    Jeff Davis Bank & Trust - Lake Charles, LA 4.33

    Courtesy of BancVue.

  6. Geoff says:

    I'm hoping to take advantage of Dollar Savings Direct's 3.05% rate.

    I may need to open up a new checking account somewhere so I won't have to pay an ACH fee.

  7. LUKE says:

    I currently have an ING account. In the last couple of months my APY has gone from 2.5% to 1.85%....DSD's 3.05% seems to good to be true right now. No catch?

  8. David says:

    I like those high yeild checking rates, Erik. Anyone have any experience with chasing these high rates? Do the high rates expire very quickly? Will I be jumping from bank to bank every month?

  9. Erik says:

    Just to give you a bit of background; community banks have been battling the big banks for customers. They've offered up these high yield checking accounts with the caveat you will complete certain requirements: direct deposit, online banking and minimum number of debit card uses. These requirements either save or make money for the community bank. This is a long term strategy to win over big bank customers and has been designed to minimize rate fluctuation. They are not utilizing the "introductory rate" strategy. Keep in mind that changes in the market could impact the rate.

  10. David says:

    I have become totally disillusioned with Emigrant/DSD because they REPEATEDLY start with a TEASER rate & then quickly DROP their rates! I THOUGHT that since it was described as a non-brick savings place that they would keep their rates higher for longer...but alas, JUST as they did dirty to me with a previous ED acct, they have DROPPED their rates from weeks to even days. I am transfering ALL of my $ back to my bank that has consistently offerd 2.7! So much for me chasing rates & good bye ED/DSD & whatever else they come up with FOREVER! Now known as the "BAD LUCK OF THE IRISH!"

  11. Janette says:

    I just pulled all my money out of Emigrant/DSD because of their ridiculous security questions. It takes FOREVER to get to your money and then they had the audacity to tell me I had answered one of the questions wrong. For the second time I had to go through changing my password...and it can sometimes take over a WEEK to get your money transferred back from them. No thanks, in these times I need immediate access. People are getting laid off at my company left and right. I'm done and I'm bringing ALL my money back to a local bank. An extra percent is not worth the frustration.

  12. Wayne says:

    I see DollarSavingsDirect is now at 2.65 percent. Down from 3.05. Just as I put a bunch of money into it. So I see that the Clear Sky Online Account from Chesapeake Bank in Virginia is still at 3.05 so will probably at the end of Feb., first of March, move from DSD to Clear Sky.

  13. Geoff says:

    Clear Sky isn't accepting applications at the moment....

    I just signed up with DSD last week, before the rate went down...logging on takes all of 3 seconds.
    Frustrated over answering security questions?? I have more important things to worry about other than what security questions I'm being asked to log on to a banking site!! ;)

  14. Bernie Bildman says:

    DSD's system has never failed for me, yes they have security questions, but that is for YOUR/MY protection. Takes maybe 1 minute longer, but no problem for me.

    I use Etrade as my transfer bank, and moving cash between Etrade and DSD takes maybe 1 day 2 days max...but the bottom line is that though when you do an electronic transfer into and out of DSD and Etrade, you do not have ACCESS to those funds for about 5 business days...BUT once the funds appear in the account, it earning interest. I basically lose no days interest, because the one day it shows on DSD, the next on Etrade, except I can't withdraw it for 5 days. That is no problem for me.

    The issue of interest rates...well pretty much ALL high yield internet banks' rates are drastically down, so I don't fault DSD -- which by the way dropped their rate down to 2.65% -- but that's better than Etrade's 2.15%

  15. AN says:

    # Wayne Says:
    February 23rd, 2009 at 3:28 pm

    I see DollarSavingsDirect is now at 2.65 percent. Down from 3.05. Just as I put a bunch of money into it. So I see that the Clear Sky Online Account from Chesapeake Bank in Virginia is still at 3.05 so will probably at the end of Feb., first of March, move from DSD to Clear Sky.

    Down to 2.50. Say goodbye to DSD.

  16. Geoff says:

    Clear Sky isn't accepting applications....the message has been on their website for a while now

  17. jks says:

    DSD down to 2.25 today, moving to GMAC.

  18. Kady says:

    I opened my account after I read some of the comments about dollar savings direct account. The bank is part of Emigrant Bank. I did not have good experience with them since. Today I went back to those comments again and realized that those comments are by the bank itself. I was trying to publish my comment in there(wrote my comment and click on SUMMIT to publish). My comment, which is negative, did not showed up in the comment area. Obviously my comment was censored.

  19. Investor0329 says:

    Looks like interest at DS is not 1.70%...going to nothing...

    Can you believe the sweep account at my brokerage only pays about 0.04%/yr!!!!
    I will be moving that out.

  20. Joseph says:

    Don't do business with Emigrant Direct. Customer service is terrible. I canceled my account. If you are transferring money in, it takes 1 day to process. If you are transferring money out, they put a hold on it for 5 business days. If you make a mistake, they won't fix it for you. "Sorry that's the policy," They told me. I'm sorry for oppening an account with Emigrant Direct. But I'm not sorry for dumping them.

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