The recent rate cuts by the fed caused many banks to lower their interest rates, including ING Direct which lowered their rates to less than 1.45%. I’m a big fan of ING and have held an account there for a few years. But there are plenty of other options out there that are offering much higher interest rates. So after looking at my options, I decided to open an account with WTDirect, the online branch of Wilmington Trust. They have a history of success dating back over 100 years and currently offer a savings rate of 1.76% (rate update March 31, 2009).
What makes WTDirect so attractive?
There are two things that caught my eye when I decided to sign up for a WTDirect account. The first thing that obviously got my attention when screening for a new bank is the 1.76% interest rate (rate update March 31, 2009). Interest rates have been repeatedly slashed in the last few months!
No subprime loans in their portfolio. When I dug deeper I discovered something more important - Wilmington Trust did not participate in subprime mortgage lending and there are no subprime mortgage-backed securities in their investment portfolio. Too much exposure to the subprime mortgage market caused several established banks to fail recently, so I place added importance on how well a bank is capitalized and the strength of their holdings. WTDirect is well insulated from those problems.
Note: There are several banks with a similar or higher APY to WTDirect, some of which require a lower minimum balance to maintain the high interest rates. I chose to open an account with WTDirect due to their stability and lack of exposure to the subprime market. E*Trade currently offers an interest rate of 1.45% and HSBC Direct currently offers 1.65%.
FDIC coverage. WTDirect is covered by FDIC insurance, up to the new $250,000 insurance limits. FDIC insurance is a must have for any bank - I wouldn’t sign up for a bank that doesn’t offer it.
Low minimum required balance and no service fees. WTDirect only requires that account holders maintain $1.00 in their accounts, and does not charge service charges to your account for a low balance. *It is important to note that the 1.76% interest rate applies to all accounts for the first 60 days, then only to accounts with $10,000 or more after that.
Ease of use, interface, and functionality. WTDirect offers a user interface that is intuitive and easy to use. WTDirect is similar to many other online banks that offer high interest rates - they cut costs by cutting the overhead, and pass the savings to you. When you sign up for WTDirect you will notice that they only offer statements by email or online. This saves them a ton of money on printing and shipping thousands of statements that would only end up in the shredder.
Great customer support. I forgot my user ID shortly after signing up for the account and the CSR was great in helping me get everything situated. She also answered a few other questions I had about WTDirect. I’ll give them an A+ in that department.
How to sign up for a WTDirect Savings Account
Signing up for a WDirect online savings account is easy and only takes 10 minutes. The steps are similar to most other online banks - you will need to enter your personal information, verify your identity, provide your funding information, then read the disclosures and confirm your account.
Funding your WTDirect account. You can fund your account via an ACH transfer, check, or by wiring funds. I chose to do an ACH transfer because it is free and easy. The minimum required deposit to open an account is $1.00, which is the amount I transferred from my ING Direct account. I will transfer the rest of my funds from ING as soon as everything is up and running with WTDirect.
Verify your linked account. To verify your linked account, WTDirect will make two small deposits within 3 business days, which you will then need to verify (the deposit description is WTSVNGTD).
No hard credit check when you apply for a WTDirect Savings Account. WTDirect does not perform a hard credit check when you apply for your account, which can be important if you are trying to improve your credit score.
Instant account approval. The approval process took about 15 seconds once I clicked submit. All in all, a very easy process.
WTDirect Savings Account makes the grade
Overall, I would give the WTDirect Savings Account a 9 out of 10. The pluses are some of the highest interest rates in the country, strong capitalization, solid online security, excellent customer service, and an intuitive user interface. There are only a few features WTDirect doesn’t offer, such as multiple accounts within an account (like ING Direct offers) or 24 hour online customer support. But those aren’t deal breakers for me. WTDirect is a great bank to stash your emergency fund and I would recommend WTDirect to anyone who has a sizable amount of money they want to park in a safe place.
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Man, $10,000 or more….not my type of bank yet!
Nice review — I’ll have to try them out at some point. For now, though, I am not bothering to chase interest rates, at least until things settle down with the financial markets.
Student Scrooge: I’m not usually one to chase interest rates, but over half a percent is a pretty big difference. Of course, the rates could drop if the Fed cuts rates again. There will always be volatility!
WTDirect is definitely in the top 10 among major high yield saving accounts in the US. Thanks for sharing this review.