Update 3/09/2010: The rate has fallen to 1.21% APY. Refer to the bottom of the post for the rate history.
The new internet bank iGObanking.com launched today with a no-minimum 5.30% APY online savings account. It looks very similar to the typical no-minimum savings account that's offered by EmigrantDirect, HSBC Direct and ING Direct. With an APY of 5.30%, it's now the highest rate for a savings account that has neither a minimum for opening or a minimum balance.
Here's the press release about the launch. iGobanking.com is a division of Flushing Savings Bank, FSB so deposits are FDIC insured (The FDIC page only has Flushing Savings' web address.) It has a safe and sound rating of 4 out of 5 stars (sound) at Bankrate.com.
Their FAQ is not the best. There's no mention about hard credit inquiries, how many external links you are allowed, if savings accounts in addition to checking accounts can be linked to, or if there are limits to the amounts that can be transfered. However, from the look of the application, it appears to be a CashEdge-based system. So it's likely the ACH transfer system is flexible.
The customer service is only available from 9:00am to 5:00pm EST, so I wasn't able to get more details. I found a few important details in their Online Banking Agreement:
- "You may authorize a third party to initiate electronic funds transfers between your Account(s) and the third party's account." - So you shouldn't be limited to their transfer system for deposits or withdrawals
- "Except as indicated elsewhere, we do not charge for these electronic funds transfers." - ACH in and outgoing transfers should be free
- The nontypical fees are listed at the bottom. Some of the important ones include: $30 fee for insufficient funds and a $10 fee for early close out of savings account (within 180 days)
They also offer certificates of deposit with terms that range from 6 months to 60 months. The minimum deposit for these CDs is $500. The rates are nothing to get excited about. The maximum CD rate equals the savings account rate of 5.30% APY for 6, 12 and 18-month terms. The APY for longer terms is just 5%.
There's no mention on the website about sign-up or refer-a-friend bonuses. Without a bonus, it's hard to justify adding this account if you already have an E-LOAN, AmTrustDirect or GMAC Bank account. However, if you're looking for a no-minimum savings account, this does offer a higher rate than EmigrantDirect, ING Direct or HSBC Direct. Of course, it's impossible to tell how long they'll remain on top. Also, there's the worry about problems with a new online bank. Problems at E-LOAN (see post) and at OneUnited (see post) are examples of issues that can arise with new online banks.
11/28 Update: I was able to speak with a CSR about this savings account this morning. Here are some additional details:
- As I expected, it's a typical online savings account with no check writing and no ATM cards.
- The external linked account can be either a checking account or a savings account.
- Up to 20 links to external accounts can be done
- No fees for ACH transfers or for account inactivity
- They do a Chexsystem verification and a soft credit inquiry, but no hard credit inquiry.
- No sign-up bonus
[Edit 11/29: Updated number of external links that are allowed.
03/09/10: 1.21% APY
12/19/09: 1.31% APY
10/20/09: 1.41% APY
09/30/09: 1.56% APY
07/31/09: 1.67% APY
07/22/09: 1.81% APY
06/20/09: 1.91% APY
05/28/09: 2.02% APY
04/10/09: 2.12% APY.
03/04/09: 1.85% APY.
02/28/09: 2.00% APY.
02/07/09: 2.81% APY
12/23/08: 3.08% APY.
04/17/08: 3.28% APY.
03/21/08: 3.52% APY.
03/06/08: 3.86% APY.
11/27/07: 4.90% APY.
09/28/07: 5.17% APY.
11/27/06: 5.30% APY.