Barclays has just raised the rate on its Online Savings Account (1.20% APY). It was just over a month ago when Barclays increased the savings account APY to 1.15%, and two months ago when it increased the APY to 1.05%. Before the May rate increase, the previous APY had been 1.00% which had held since December 2014.
Competition is having an effect. It was just last week when Synchrony increased its savings account APY to 1.20%. Most of the large internet banks don’t seem intent on making any big increases. So we continue to see these small rate increases. With gradual Fed rate hikes, we probably won’t see many big rate hikes like we saw in 2005 and 2006 when rate hikes of 25 and 50 bps were common. Nevertheless, small rate hikes are better than no rate hikes.
Barclays’ Online Savings Account has several nice features such as no minimum balance requirement and no monthly fees. Below is a copy of my Barclays savings account review from last month.
- The funding account link is maintained for future transfers so you don't need to re-verify the account after the account is opened
- They allow up to 3 external account links per owner
- After the account is opened, ACH transfers are limited to $250,000 per transaction. If you have a larger amount to transfer, they can process the transfer if you call.
- Maximum balance allowed per social security number is $5 million
- They allow up to 4 beneficiaries per account.
- They do not allow accounts in the name of a trust. However, trusts can be named as a beneficiary.
Thanks to the DA reader buckeye61 who first mentioned the news of this rate increase in the DA Forum.
Barclays Dream Account
Barclays also increased the rate of the Dream Account to 1.20% APY. When Barclays first introduced the Dream Account, it had a rate that was slightly above the Online Savings Account rate. Now that the Dream Account has the same rate, there isn’t much incentive to open this account. Currently, the primary advantage of the Dream Account over the Online Savings Account is the small bonuses that can be earned on the Dream Account. These include:
- Every time you make consecutive deposits for six months, Barclays will give you a 2.5% bonus on the past six months of interest earned.
- Make no withdrawals for six consecutive months and earn another 2.5% bonus on the past six months of interest earned
The added bonuses effectively add around 5 basis points to account’s yield. The main downside with this account is that there is a maximum monthly deposit of $1,000.
Barclays Online CDs
Two weeks ago, Barclays increased the rates on most of its CDs. Its 5-year CD is currently the most competitive rate. The rate isn’t the highest, but its early withdrawal penalty is only 180 days of interest. Please refer to this blog post for more details.
Barclays is an internet-only bank that is headquartered in Wilmington, Delaware. According to Barclays’ terms and conditions, “To open an account with us, you must be at least 18 years old, a U.S. citizen or a resident alien with a valid Social Security Number or other Taxpayer Identification Number, and have a residential address in the United States.” Opening an account, including CDs and Savings, must be done online.
The Barclays internet bank is part of Barclays Bank Delaware which is a FDIC member (FDIC Certificate # 57203). The bank is best known in the U.S. for partnering with companies in offering co-branded credit cards. It's part of the U.S. division of Barclays, a British multinational megabank.
Barclays Bank Delaware has an overall health grade at EpBooks.us of A with a Texas ratio of 5.56% (excellent) based on March 31, 2017 data. Please refer to our financial overview of Barclays Bank Delaware for more details. The bank has been a FDIC member since 2001.
How the Savings Account Compares
When compared to the 207 Savings Acccounts tracked by EpBooks.us that are available nationally, seven savings accounts have higher rates. Barclays’ savings account rate is now tied with the savings account rates at Synchrony and GS Bank. Below is a sample of these seven accounts that have higher rates, showing how they compare with Barclays.
The above rates are accurate as of 7/25/2017.