$50 Bonus and 5.25% Savings Account at a New York CU (RateEdge)

RateEdge.com is offering a $50 cash bonus for opening a RateEdge.com account with $5,000 or more. It must be a new account and the money must be new to Sunmark FCU (the parent of RateEdge). The offer is good through 12/31/06. The account must remain open for 90 days after account opening. The $50 will be credited within 30 days.

This promotion is a little surprising since this RateEdge's 5.25% APY savings account is the best online savings account from any credit union. RateEdge.com is an online division of Sunmark Federal Credit Union. Sunmark launched RateEdge and its high yield online savings account about a year ago. The savings account is similar to those offered by online banks. It has no monthly fees, only a $5 minimum deposit requirement, and no rate tiers. Over the last year, the rates have averaged higher than rates at HSBC Direct and EmigrantDirect. Below shows a history of the rates:

RateEdge       RateEdge   Fed Funds  Emigrant     HSBC
Rate Change    APY        Rate       Direct APY   APY
Oct 10         5.25%      5.25%      5.05%        5.05%
May 16         5.25%      5.00%      4.50%        4.50%
Apr 05         5.00%      4.75%      4.50%        4.80%
Feb 09         4.75%      4.50%      4.25%        4.80%
Jan 07         4.50%      4.25%      4.00%        4.25%
Nov 14         4.25%      4.00%      4.00%        4.00%

Until recently, RateEdge had maintain an APY 25 basis points above the Fed funds rate. However, this ended on the last Fed rate hike. The APY has remained at 5.25% since May. Perhaps the credit union decided to skip a rate hike and instead do this $50 bonus promotion.

If Sunmark wants to increase deposits, it needs to expand its field of membership. Unfortunately, the FOM is primarily limited to those who live in parts of New York State. To open an account at RateEdge.com, you have to live, work, worship, own a business, volunteer or attend school in one of the following New York counties: Albany, Montgomery, Rensselaer, Saratoga, Schenectady and Schoharie. You can also be eligible if you have an immediate family member who meets the above criteria (even if they're not already a member).

Push for Online Savings Accounts from Your Own Credit Union

There's no reason why other credit unions can't offer similar online savings accounts. They may not all be as competitive as this, but by applying the same online business model, credit unions should be able to give the online banks a run for their money. Another example of a credit union doing this is Beehive Credit Union of Utah. It's currently offering an online savings account with a rate of 5.25% (see post).

I've contacted my credit unions about offering this type of online savings account. I've written both to the management and to the board. I received a reply from the CFO and he was very interested in Sunmark's RateEdge. However, he wasn't sure how many members would want this. So that's why we need more people to speak up. The more people who push for this, the more likely credit unions will respond.