Stashing Cash at Higher Rates

Though rates have dropped dramatically, some online banks are offering as much as 3.5% for savings accounts. It pays to look around

Peter Profesda admits he's a rate-chaser. The teacher of computer classes at a two-year college in New York spends a few hours a week checking bank Web sites and banking-related blogs to find the highest yield and other promotions. He's changed banks numerous times in the last few years, or has at least opened additional accounts, just to take advantage of promotions. Once a customer of ING Direct, a Wilmington (Del.) subsidiary of Netherlands-based ING Groep (ING), he switched to FNBO Direct last year after being lured by an offer of a 6.01% annual percentage yield (APY). Shortly after he opened his FNBO account, the bank cut its rate to 5.05%, and then to 4.30% and to 3.25%, where it stands currently. But Profesda was able to enjoy the promotional rate for his first three months at FNBO Direct.

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