Banking Deals of The Week: Oct. 13


Wall Street types are buzzing over a report that the Federal Reserve is mulling over a second round of U.S. Treasury purchases, a move the Fed said it was considering according to the minutes of its Sept. 21 Open Markets Committee meeting.

Rumor has it that the Fed wouldn’t spend as much as it did on its first round of government bond purchases, when it purchased about $1.7 trillion worth of government securities, but more spending is likely.

According to the minutes of the Fed meeting, “Many participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate, or if inflation continued to come in below levels consistent with the FOMC’s dual mandate, it would be appropriate to provide additional monetary policy accommodation.”

The minutes also showed that the Fed “is prepared to provide additional accommodation if needed”, reflecting “the members’ sense that such accommodation may be appropriate before long.”

“Meeting participants discussed several possible approaches to providing additional accommodation but focused primarily on further purchases of longer-term Treasury securities and on possible steps to affect inflation expectations,” the report added.

Loosely translated, any move to buy more government bonds is likely to push bank rates down as the Fed tries to free up more money for credit and spending. That’s what happened in late 2009 and early 2010, when the Fed bought up government bonds in an effort to help the housing market kick into higher gear, and help consumers and businesses get their hands on more money.

We hate to say it, but bank rate investors once again seem like the last priority for government economic policy makers. Right now, it’s recession redux with the Fed using bank savers as pawns in a war to loosen credit and get the economy moving again.

Bank Checking

To the diligent, that means more of the same – finding good bank deals in hard-to-find places. Let’s do our part with a good checking account deal from Legacy Bank that pays out a 3.00% APY on balances up to $25,000.

Legacy calls the deal its “win-win” checking account: It’s an offer with a high interest rate, a feature that covers ATM transactions of up to $3.00 at a time, and it includes free checks.

Here’s what you need to do to get the deal:

•    Make the Legacy free checking account your main bank checking account.
•    Open your account with at least $100.
•    Sign up for direct deposit.
•    Receive your monthly checking accounts statements and all notices regarding your checking account electronically.
•    Use your Legacy Bank Visa (Stock Quote: V) check card on this checking account at least 12 times per month.

Here's what you’ll get from the ”win-win” deal:
•    3.00% APY on balances from $0-$25,000 (the average checking account rate right now is 0.108%, according to the BankingMyWay National Checking Interest Rate tracker)
•    1.00% APY on balances from $25,000.01-$50,000.
•    0.03% APY on balances over $50,000.
•    Free Legacy Bank VISA check card.
•    Free eBanking.
•    Free eStatements with e-mail notification.
•    Legacy bill pay.
•    Free first order of Legacy Bank checks.
•    Rebate up to $3 of any fee at any ATM worldwide as long as you withdraw at least $100.

Certificates of Deposit

Certainly, Ally Bank has enough problems right now as it seeks to fix its toxic foreclosure process – the bank has halted foreclosure proceedings in 23 states in order to re-examine its loan document review operation.

But at least the problem hasn’t leaked onto the bank’s certificate of deposit offerings.

Case in point: Ally has a good 11-month, no-penalty CD deal that pays out at 1.30%. Compare that rate to the 0.590% average rate for 12-month CDs, as measured by the BankingMyWay National CD Rate tracker.

That’s a good return-on-investment for a CD that offers a “no penalty” withdrawal option. The bank doesn’t require any written notice to withdraw funds from the CD account (as most banks do), and you don’t have to pop the withdrawal funds into an Ally bank account (you can use your own).

Here’s more on the deal:
•    You don't have to jump through hoops for an early withdrawal. Some banks require advance written notice and make you deposit withdrawal funds into another one of their accounts.
•    With the Ally Ten Day Best Rate Guarantee, you get the option of a higher rate. Most banks offer only one—the one you get the day you fund.
•    Ally claims “we grow your money faster” by compounding interest daily. Many others compound monthly, quarterly, or even annually.
•    Ally does not require a minimum deposit.

Sounds like a good deal to us.

Pre-Paid Gift Cards

MasterCard (Stock Quote: MA) has a new deal that offers its pre-paid gift card holders free ATM access at thousands of machines across the U.S.

The credit card giant recently announced a partnership with CardTronics, Inc., which runs AllPoint Network, the U.S.’s largest surcharge-free ATM network with more than 37,000 ATMs in the U.S.

The offer is good for MasterCard prepaid gift cards and travel cards. Free ATM usage might be a good marketing play for MasterCard, but it’s a real-world benefit for cardholders looking for some quick cash with their cards.

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