Emigrant Direct: American Dream Savings Account™ Review

Based In:   New York (Emigrant Bank)
Bank RTN:   226070319
Minimum Deposit to Open:   $1
Minimum Balance
to Avoid Fees:
Website:    Emigrant Direct

Emigrant Direct Savings Account

Emigrant Direct has made a big splash in the banking world. And if you're still tucking away your savings at a traditional bricks 'n' mortar bank or credit union, you've probably been missing out. And missing out big.

The proliferation of online banks — and more specifically, online savings accounts — has been an absolute boon for savers. With interest rates at historic lows for the early part of this century, online savings accounts such as Emigrant Direct, ING DIRECT (review), and HSBC have provided customers with viable avenues for decent returns from their liquid savings.

Compounding is the money that money makes, added to the money that money has already made. And each time money makes money, it becomes capable of making even more money than it ever could before. This is called a virtuous circle, and it's what we want to get working for us.
— Lowell Miller,

The Single Best

As an example, while traditional banks and credit unions recently have been paying interest of perhaps 1 or 2 percent annually on their savings accounts, Emigrant Direct has consistently delivered rates of 4 percent or better to holders of their American Dream™ online savings account.

If you're interested in allowing your saved money to earn interest at a rate that at least keeps pace with inflation — and you should be! — then you understand how beneficial these online savings accounts are. Financial health is dependent on keeping some amount of saved money liquid (available at any time, or "nearly" any time). Online savings accounts provide this liquidity. They'll also give you safety and a better-than-moderate return. Thus, they're ideally suited for things like Freedom Accounts and Emergency Funds.

Emigrant Direct: Rates Talk, Extras Walk

A division of Emigrant Bank (based in New York), Emigrant Direct quickly emerged as a leader in the online-savings world. Their high interest rates (related to other banks' savings accounts) have consistently kept Emigrant Direct in the top tier of all online banks. (Their Spanish-speaking division, Banco Fortuna, appears to be heading the same direction.)

Some notable features, most of which are further detailed on Emigrant's "Account Disclosure" page:

  • No minimum deposit required to open the account. One dollar gets it done.
  • No service fees, transaction fees, penalties, or hidden charges.
  • Account access anytime. Deposits and withdrawals are easily initiated online.
  • Interest compounds daily, and is credited to your account monthly.
  • You can set up one-time, as well as repeating, electronic money transfers.
  • Online interface is much improved from original version.

Until 2006, readers familiar with ING Direct typically found Emigrant Direct's signup process to be drawn-out and cumbersome. Sure, their old FAQ said signup was "quick, easy, and convenient." But that was debatable, as opening the account required waiting for Emigrant to snail-mail applicants a document or two before the account could even be accessed. It went down something like this, as detailed in their **old** FAQ:

How do I know when my account is open?

For security reasons, opening an EmigrantDirect account involves three steps:

1. Completing the online application and selecting an initial funding option (ACH Debit or Mail a Check).

2. Once your application is completed and approved, EmigrantDirect must then receive funds (initial funding amount on the application) from your external linked checking account (if you funded via ACH debit), or when we complete the processing of the check you have mailed to us.

3. EmigrantDirect then sends you a letter, via U.S. mail, containing your account number, and instructions for completing the account opening process. This step, deliberately outside of the online environment, provides an added level of security for you.

You cannot view your EmigrantDirect account information or process additional transactions until you complete the instructions in this letter, and register your account number and other information that identifies you in the appropriate fields on EmigrantDirect.com.

But in 2006, the savings gods smiled upon us. Emigrant revamped its system. The tedious days of snail-mailed account-opening forms are now gone ... thankfully! Now anxious Emigrant savers find this:

How do I know when my account is open?

After you submit your online application, you will see a confirmation page with instructions on the status of your account. If your application is approved, you will be able to log on and see your account information immediately. If we need to take some additional steps to complete the application process, we will contact you in 2 to 3 business days with our decision.

Thank you, Emigrant. That is how it should be done.

Before opening your account, I highly recommend that you take a look at Emigrant's FAQ page. It clears up some important questions and covers a few things that most people don't think about.

The Account-Opening Experience

Obviously, since I've been with Emigrant for a few years, I haven't had any reason to try out their new online account-opening system. However, close friends of mine have.

So far the decision has been unanimous: The new signup process is entirely online. It's essentially painless. I'm told that it rivals the startup ease of every other online bank. If you have all your information handy (SS#, driver's license #, previous address, etc.), it should take you perhaps eight or ten minutes to complete.

Once you've input all that stuff, as well as your checking account's information (account and routing numbers) and the initial deposit you wish to use to open your Emigrant account, you'll get an email from Emigrant that looks similar to the shot at the right. Click to enlarge and read it.

Emigrant Gets an Interface-lift

It took them a while, but midway through 2006, Emigrant finally got around to spiffing itself up a little. Prior to this facelift, Emigrant Direct's website was extremely ... dated. (And that's putting it nicely.) Attractive, techy graphics and blended backgrounds were entirely missing. All the graphics were blocky and flat. You might as well have been taking a trip back to 1996.

But that's history now. Today you'll find a site that is much more professionally-designed. Heck, I was happy just to see a couple of rows of more-contemporary 3D buttons lining out the interface. And below those? Well, mostly just simple hyperlinks to all your account-management subfeatures. It looks quite nice, I think. (Check the screenshots below.)

Some notable changes with the revamping:

  • Interface is sharper and much more contemporary. Finally they're taking presentation seriously!
  • Login security has been heightened, with longer required passwords and random user-created questions.
  • Like ING DIRECT, Emigrant users can now see how much interest their account has accumulated for the month. (From the splash screen, click your hyperlinked account name. This pulls up your Account Details screen, where among other things your current month's earned interest is shown.)
  • Transactions may be downloaded to Quicken, MS Money, or CSV (spreadsheet) formats.
  • Twelve months' worth of past statements are downloadable in PDF format.
  • Your Emigrant account and all linked accounts may now be nicknamed for easier recognition. (You'll find this feature under the 'Preferences' tab.) Nice, because you now also have the ...
  • Ability to purchase CDs and open new accounts (subaccounts, if you will) from within your current savings account.
  • Added a Customer Service area with message Inbox and Sent Items.
  • Account Alerts can email you when specific criteria (minimum balance, maximum balance, failed transfer, etc.) occur.

All in all, I'm very happy with the upgrades. Mostly, though, I'm happy that Emigrant, as a (formerly) small bank, seems to be working diligently to improve its stature in the online world.

The American Dream: Money In, Money Out

One of the things that makes folks nervous about online savings accounts, I've found, is the fact that the money you deposit there isn't immediately available if you need it. And that's absolutely true. It isn't immediately available.

In my experience, when I initiate a transfer of money FROM my Emigrant Direct account TO my regular checking account, the money is in my regular account within two or three business days. Never have I had such a withdrawal take longer than that. But keep in mind that the time this takes could also vary depending on your banking institution, and on the time of day when you initiate the transfer.

Conversely, when I've initiated a transfer of money FROM my regular checking account TO my Emigrant Direct account, the money has always hit my Emigrant account within two to three business days.

Grab Your Statements Anytime

Emigrant makes it stupid-easy to grab your account statements, in PDF format, anytime you like. Just click the STATEMENTS tab, choose the month you wish to see (via drop-down menu), and the file's available for download immediately.


Once I got past the drawn-out account-opening process (which is now gone!), I found myself wishing I'd opened the account a lot sooner. Before Emigrant, I was a devoted ING DIRECT user. But right now, Emigrant's interest rates easily outpace those of ING . . . and most everybody else, too. I haven't seen anything to make me believe this trend won't continue. If you're hunting for the best return possible for your savings, Emigrant deserves a very close look.

Given my personal experience with Emigrant over the last several years, and the experiences that others whom I've spoken with have had, I must recommend Emigrant Direct wholeheartedly. They're where I keep my Emergency Fund, as well as any credit-card arbitrage balances I may have in play. I'll say this: It is going to take something really big to get my money away from ED.

Consider opening an Emigrant account soon. The streetwise saver in you will be very glad you did.

Michael • Dec. 10, 2006

Update • January 5, 2007:

I've now linked a total of three checking accounts to my Emigrant Direct savings, and everything's working beautifully. I've also linked my ED account to my Paypal account (from Paypal's interface), and transactions are smooth both ways.

A small feature that I've noticed only recently (and it may be something I've just overlooked before) is this little info box:

When you make a deposit to your ED account, a box like the one shown above appears on your Summary page. This lets you know exactly when those new funds will become available. Nothing too groundbreaking, I suppose, but it's good to know. Now ... if only I could get the rest of my life to operate this smoothly!

Update • March 25, 2007:

Folks who read my site might know that I routinely engage in credit-card arbitrage. Borrowing money from credit cards at zero percent in order to invest it at a higher rate in a guaranteed savings account (and thus pocket the interest as profit) isn't for everyone, but to this point, I and several other bloggers have made it work.

Long ago I chose to use my Emigrant Direct account for this purpose. Recently a reader asked me how this has worked. I can only respond "Fabulously."

It's rare that I make withdrawals from my Emigrant account, but the one regular withdrawal I do make comes from the credit card on which my zero-percent balance resides. I registered my Emigrant savings with this particular credit card as the primary payment account, so that when it's time to make a payment or close out the arbitrage altogether I don't have to move money from Emigrant, to my everyday checking account, and then to the credit card. Instead, the credit card simply debits my Emigrant savings directly once I schedule the payment.

(You should read Emigrant Direct's Account Disclosure Statement to learn more about limitations on transfers to and from your savings account. Notably, federal regulations limit the number of transfers per statement cycle.)

Anyhow, this is just another way that an online savings account like Emigrant Direct could be useful (and profitable) for you.

Update • November 10, 2007:

The more online accounts I open, the more I've come to appreciate Emigrant Direct. Their transfers are still faster than any other OSA I've tried — the possible exception being ING DIRECT. How fast, you ask? Yesterday was Tuesday, and early in the morning — probably like 9am or so — I initiated a transfer from Emigrant to my credit union's checking account. The funds were in my account today when I checked my balance after lunch. Sweet, huh?

So, even with the higher promotional rates recently offered by banks like FNBO Direct, I always end up comparing them (unfavorably) to Emigrant. I like Emigrant's interface; I like their service; I like their simplicity.

In short, Emigrant is still the preferred online savings account for my liquid savings.

Update • August 10, 2008:

Still going strong. Emigrant continues to hold my Emergency Fund, which is the bulk of my liquid savings. They've given me absolutely no reason to change!

Ratings are on a scale of 1 to 5, with 5 being the top ranking.
Is it easy to open an account?
Do they adequately adjust interest rates over time?
Is its usage intuitive?
Is it efficient in function?
Are transactions processed quickly?