Dollar Savings Direct Review - Everything You Need to Know

An online-only option that's simple and easy

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Dollar Savings Direct is an online-only bank offering deposit accounts at an impressive interest rate. Dollar Savings Direct is a division of Emigrant Bank, founded in 1850 by Irish Emigrants and currently has $6 billion in assets.

Who is Dollar Savings Direct Best for?

Dollar Savings Direct will appeal to customers looking for an online-only bank. It’s perfect for customers:

Pros

  • At 1.8 percent APY, their savings account is much better than the national savings account interest rate of 0.32 percent.

  • Certificates of Deposit yield up to 2.8 percent — also significantly higher than most banks

  • No fees or service charges

  • No minimum deposit required

Cons

  • Doesn’t offer a checking account so you’ll need a second bank for your everyday banking needs

  • History of fluctuating rates — larger than other banks

  • Other online banks offering two percent or more APY on savings accounts

  • No ATM access or mobile banking app

Types of Accounts

Dollar Savings Direct offers the following types of accounts:

  • Savings Account
  • Certificate of Deposit
  • Purchase of Precious Metals

Learn more about each type of account Dollar Savings Direct offers below.

Savings Account

Dollar Savings Direct calls it’s checking account the Dollar Savings Account — it’s their version of an online high-yield savings account. Advantages of this account include:

  • No monthly fees or service charges
  • No minimum balance requirement
  • A highly competitive 1.80 percent APY
  • No fee for excess monthly withdrawals

Banking with Dollar Savings Direct will feel like a no-frills experience. If you’re the type who is looking for the modern, technology-driven, space-age app experience, you’re not going to like Dollar Savings Direct because it has no app. Even their website looks like something from 10 years ago but a savings account isn’t something that requires a lot of maintenance.

To open a Savings Account with Dollar Savings Direct you need a “funding bank.” This is a checking account held at another bank outside of Dollar Savings Direct. Although you can fund your account with a check, the easiest way is through ACH from your bank that holds your checking account.

Dollar Savings Direct doesn’t accept direct deposits of your paycheck, in part because you don’t want to be paying your monthly bills out of your savings account. Interestingly, Federal Regulation D limits withdrawals from a savings account to six per month. If you go over six, your bank has the right to charge you a fee for each withdrawal. Some banks charge as much as $15 but Dollar Savings Direct, in keeping with its no fees approach, charges nothing.

To that end, you could move money back and forth from your banks to pay bills but there’s little reason to go through such hassle. Instead, use your savings account in the traditional way of parking money there. A savings account works best as a place to earn interest on your money without the risk of investment markets.

Dollar Savings Direct isn’t completely without fees but the fees are for services most customers will never need. Fees like a $100 legal fee for processing subpoenas or levies. Other fees look like this:

 My Bank Tracker

Accessing and managing your money is done in the traditional sense of logging on and managing your account through its online banking portal. You can fund your account through a check for the initial opening deposit but after that, you must fund the account using your funding account—your checking account through another bank.

Because Dollar Savings Direct doesn’t offer a checking account, you have to be OK with banking at more than one financial institution. If you’re looking for a one-stop shop, Dollar Savings Direct isn’t for you.

Also, keep in mind that you won’t get ATM access or a debit card through Dollar Savings Direct. Although this seems like a glaring pain in the backside, remember that this isn’t your primary bank. You aren’t paying bills or writing checks out of your savings account so the lack of an ATM access or any kind of debit card shouldn’t be a deal breaker.

Although Dollar Savings Direct has competitive rates, they are no longer the highest. You can find rates as high as two percent with as little as $1.

Certificate of Deposit

Dollar Savings Direct’s Certificate of Deposit is for current savings account holders only. Advantages include:

  • Impressive top APY of 2.8 percent for a 60-month CD.
  • Minimum deposit of only $1,000
  • Interest compounded daily and credited monthly

Certificates of Deposit are one of the easiest products to shop for because most banks have the same rules, which means you will only shop based on rates and terms. That’s also the case with Dollar Savings Direct.

Its CD offerings come in 4 flavors:

CD Offerings
Term APY
12-month 1.80%
16-month 1.90%
24-month 2.00%
60-month 2.80%

All have a minimum balance requirement of $1,000 and you can’t withdrawal the principal until the maturity date of the CD without paying early withdrawal penalty. You also can’t add to the principal once you initially fund. You will have to wait until the current CD expires or, if your deposit is more than $1,000, you could start a second CD.

Just like its savings account, Dollar Savings Direct’s CDs are FDIC-insured, meaning that the first $250,000 is completely safe. Although, as some customers found during the recent financial crisis, getting to your money may take some time if the bank closes.

Dollar Savings Direct and its parent company Emigrant Bank are now well capitalized so no need to worry about such things.

Purchase of Precious Metals

Although not something you see advertised often, Dollar Savings Direct sells and stores precious metals for its customers. In fact, nearly half of its FAQ page is devoted to its precious metals business.

Customers can purchase gold bullion bars and coins provided by the United States Mint — a bureau of the Department of the Treasury. Coins are only bullion coins, meaning that they aren’t valued by anything other than weight. These aren’t commemorative coins that may have value based on how many were minted, age, rarity, etc. Bullion coins are just like gold bars.

Because you must have a Dollar Savings Direct Savings Account, you can only purchase precious metals with funds from your account. You must also be logged in to see current pricing. Like any precious metals site, prices change with the market.

Along with buying, you may also sell your precious metals at competitive rates. Funds are deposited directly into your Dollar Savings Direct savings account.

Finally, Dollar Savings Direct will store your gold at a rate of .80 percent of the daily value of your holdings per annum. Or you may have it shipped to your door. If you’re so rich that you can order gold bullion of such quantity, Dollar Savings Direct will arrange for armored car delivery.

Overall Experience

It’s important not to judge Dollar Savings Direct as you would your primary bank. Remember that you aren’t going to pay bills out of your savings account, have your paycheck directly deposited, set up investment accounts, or most of the other banking activities you’re accustomed to. This is a bank you use to lock in a higher interest rate on money you don’t plan to touch for a long time—more like an investment account.

For that reason, you shouldn’t have a lot of interaction with the bank other than the normal monitoring that a responsible consumer would do.

With that disclaimer in mind, you will find Dollar Savings Direct’s interface to feel like something from the early days of the Internet. Head to their website and you’ll wonder where to find the rest of their website. No stock imagery, not even a menu. Logging in as a customer feels the same way. If you’re looking for a great online experience, you’ll be disappointed.

But more important, customer reviews for the bank are generally positive. Although you can find some negative reviews—that’s true of every bank—the majority of people say that their experience is positive.

Reviewers and customers rightly point out that gone are the days when Dollar Savings Direct was the best deal in cyber-town. Today, their rate is still excellent but other banks with better-known names are offering accounts that pay higher rates. Some of those names include American Express, CapitalOne, Goldman Sachs, Synchrony, and Discover. Make sure to read the fine print, as some of Dollar Savings Direct’s competitors have other rules, conditions, and fees but no longer can one assume that Dollar Savings Direct is the leader in high-interest savings accounts and CDs.

About Dollar Savings Direct

Dollar Savings Direct is an online-only bank started in 2008. It’s parent, Emigrant Bank, was hit hard during the financial crisis, eventually requiring a bailout but has since recovered to the point of being a well-capitalized bank.

Dollar Savings Direct is FDIC-insured meaning that customers don’t have to worry about losing their funds if the bank were to go out of business.

Additionally, the bank uses two-factor authentication and the most up-to-date encryption standards and cybersecurity practices for keeping your online account safe.

The Bottom Line

Benefits

Unlike other banks that offer interest rates on savings account that are arguably insulting, Dollar Savings Direct’s 1.80 percent rate is one of the most competitive rates you’ll find, although not the highest. Their Certificates of Deposit are also highly competitive with rates as high as 2.8 percent.

In a world where people generally don’t trust big banks, largely because of the hefty fees they charge, Dollar Savings Direct shines with their no fees or service charges.

Drawbacks

If you’re looking for all the benefits or a traditional banking experience, you’ll find very few of those at Dollar Savings Direct. They have no physical locations, you can’t open a checking account, there are no ATMs to access, no debit card access, and you'll have to use a bare-bones website.

However, for what it offers, it does just fine. You don’t need all the bells and whistles for a savings account and possibly a CD.