Wilshire Bank is enticing savers with tantalizing savings rates from 1.77% up to 2.79% APY.
The Rainbow Savings plan is a contract where you agree to setup monthly automatic transfers into the Rainbow Savings Account of a predetermined amount and for a predetermined amount of time. According to a CSR (customer service representative) you cannot put a lump sum in the Rainbow Savings Account, you can only make the scheduled monthly deposits.
You will earn 0.26% APY more for opening a checking account at Wilshire Bank and using it to make the monthly transfers to the Rainbow Savings Plan. Only the Simple Checking Account has no monthly fees or minimum balance requirements.
For example, to get the best rate of 2.79% APY you need to pick the longest contract term of 36 months, open a checking account with Wilshire and agree to transfer at least $26.62 from the Wilshire checking account every month into the Rainbow Savings Account. By the end of the 36 months, you will have $958.32 saved plus interest. If you have commitment problems with building an emergency fund, the Rainbow Savings Account may just be the kick in the pants you’ve been needing!
Fees and Restrictions:
There is a $10 fee for depositing more than once a month into the account (calculated as more than 3 deposits per quarter).
If you fail to make your scheduled monthly deposit for three months in a row, your account will automatically be converted to a regular Wilshire Savings Account. Also, any failure to make the regular deposit on or before the deposit cycle date will reduce the interest your account accrues.
Unless you live near a Wilshire branch, the extra 0.26% APY is not likely worth the hassle of opening a checking account from a distance and mailing in checks when you want to make deposits.
Wilshire Bank has 23 branches in: California, New York, New Jersey, and Texas.
Is this a Good Deal?
The APY is very good compared to the best cd rates out there. Currently Melrose Credit Union’s 3 Year CD is paying 2.17% APY. Rainbow Savings pays more than that at 2.53% APY even if you don’t open a checking account with them and just use your current bank to make transfers. SmartyPig is only paying 1.35% APY for a similar savings plan (except it isn’t contractual).
However, because you can’t make a lump sum deposit, a CD would earn a larger total return. Rainbow Savings is really for those who don’t currently have a lump sum to invest or want to start a fresh savings fund.
One advantage of this offer is there is no penalty for withdrawing your funds and closing the account, you simply won’t earn the interest that would’ve been credited for that period. You may want to inquire as to how often interest is credited.
This offer is available nationwide, although the application time is longer because you must fill out the downloadable application form, print and mail it.
You can see the details here:
https://www.wilshirebank.com/public/personal_rainbow.asp
Compare the top money market rates and CD rates nationwide.
