When many banks begin competing in the online savings world, they offer an inordinately high interest rate for a good 6 months or so and then drop back to something less competitive once they gain a significant amount of customers. More fickle customers that are chasing the highest interest rates simply move onto the next bank offering a great deal, but a few online savings banks consistently offer interest rates well above the rest, and one of those is KeyDirect. For over a year, KeyDirect has been offering an interest rate of 2.00% APY or above on their money market savings account, even after two rate-cuts from the Federal Reserve.

The account has a minimum opening balance of just $50.00 which puts it within the realm of almost all savers. You’ll earn an interest rate of 2.00% APY on any balance up to $250,000.00. There are no monthly service charges to speak of and you’ll receive free checks to take money out of the account with.

You can apply online through their website or over the phone. If you fill out the online application, a customer service representative will call you by phone to verify your identity by asking you questions about your credit report. It’s a pretty straight-forward process compared to some other online savings banks. When opening an account, a hard-credit pull will not be confirmed so that your credit score will not be negatively affected.

The major down-side of this bank is the limitations it puts on ACH electronic transfers. KeyDirect will limit you to $2,000 in transfers per day and a total of $20,000 per month in transfers. If you have a large amount of money in other accounts you want to transfer in, it might take several days with of transfers to move all of your money over to KeyDirect. The bank does not block external ACH transfers from your outside checking or savings account.

Because of some state laws, KeyDirect only operates in 37 dates and Washington, DC. If you live in AK, CO, ID, IN, KY, ME, MI, NY, OH, OR, UT, VT, or WA, you won’t be able to open an account with them. The bank is FDIC insured and has been for the last 51 years, so chances are it’ll be around for a while.

This entry was posted on Saturday, December 13th, 2008 at 1:12 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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