Dedicated to Deposits: Deals, Data, and Discussion

FNBO Direct's New CDs and Checking Account


FNBO Direct
FNBO Direct just announced the addition of online certificates of deposit and a checking account called BillPay Account. The BillPay Account seems to be like ING Direct's Electric Orange in that there are no paper checks. You can only pay others by online bill pay. The yield of the BillPay Account is 3.50% APY which is a little higher than the bottom tier of the Electric Orange Account (currently 3.25%).

The internet CDs have terms of 9, 12, 18 and 24 months. The minimum deposit is $500. The rates are below 5% on all terms except for the 9-month CD which has a respectable yield of 5.25% APY.

Update 11/21/07: A reader astutely noted that FNBO Direct includes a call option in its CD disclosure:
We may accelerate the maturity or call this account at our option on any maturity upon 30 days written notice.

A callable CD takes away the rate lock advantage of a CD. As this FDIC page describes: "Callable CDs give the issuing bank the right to terminate the CD after a set period of time, but they do not give you that same right."
Update 11/26/07:. Here's an excerpt of an email reply I received from FNBO Direct regarding the callable feature of these CDs:
Our CDs are callable, however, even in our parent company, we have never called our CDs to come due early.

So it should be rare for them to call these early, but nevertheless, they do have the option.

More details of these new accounts are available at FNBO Direct's Learn More page. They've also added a new BillPay Account FAQ page and a CD FAQ page.

Both of these accounts require that you have the FNBO Direct savings account. So you have to log in to your savings account to apply for these. The link to the CD page is at the top right of the account page and the link to the BillPay Account page is at the bottom left of the account page below the credit card link.

You would think that once you're logged in to your savings account, you could apply for these with just a few clicks. Unfortunately, that's not the case. You have to fill out an entire application again as if you were a new customer.

The accounts can be funded by a transfer from your FNBO Direct savings account or by ACH from an external account. It can also be funded by check, but I was told the account start date may be delayed for up to 10 days while a hold is placed on the check.

After the application, you then have to wait for the letter to be sent to your home with the account number. Once you have the account number, you can log in and add the new account for online access.

When the CD matures, there's a 10 calendar day grace period in which you can close the CD without penalty. This requires that you call. You can request that the money be transfered back into your FNBO Direct savings account. Early withdrawal penalties are 3 months of interest for the 9 and 12 month terms and 6 months of interest for the longer terms.

I don't know why FNBO Direct made this application process so difficult for these new accounts. Once you're already a customer and logged into your accout, you should be able to open these accounts with a few clicks. If you do go through the process of opening these accounts, hopefully they won't be demanding any more employment history with the threats of account freezes.

Even though these new accounts could have been done better, it clearly shows FNBO's intent to make FNBO Direct a complete online bank. It has only been about two months ago since they launched their cash back credit card.

One good thing about FNBO Direct is that they are still maintaining a very competitive rate of 5.05% APY on their savings account. Of course, this may change any day now, but their rate history before and after their 6% promotion has been very respectable. For more info on their savings account, please refer to this previous FNBO post.

Thanks to the readers who sent emails and commented on these new products.

Related Pages: FNBO Direct, CD rates, checking account

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Comment #1 by Anonymous posted on
CSR at FNBO confirmed that new credit report may be pulled, HARD for overdraft protection and if previous record on file with the saving account do not match, more info will be required via USPS mail or denied altogether to open any new accounts .....

Good luck, I'm not applying
for any new accounts at FNBO.

Comment #2 by BudgetBoy (anonymous) posted on
I agree after the fiasco with their High Yield Savings account, I would not apply for another account at this bank unless they were paying out a $500 sign up bonus.

Comment #3 by Anonymous posted on
If they want to be a "complete online bank", they better get their act together.

Having to do a complete new application, just shows how much of a kludge their offering is.

And the fact that they didn't come out with the CDs and checking before the end of the 6% promotion, is amazing to me.

Comment #4 by Rick (anonymous) posted on
Well, I just want to provide some balance, since everyone else seems to hate FNBO Direct. I have been using FNBO Direct for about six months now, and I have had absolutely no problems. No accounts frozen or anything. Their APY is currently among the highest you can find. Yes, you do have to fill out a new application for the CDs, but it's not that big of a deal. It's basically just typing in your SSN and address. Took me about 60 seconds to do.

Comment #5 by Anonymous posted on
WARNING! This is a CALLABLE CD. You must leave your money in for the full term, but FNBO can terminate the CD before maturity with 30 days notice! From the disclosures: "We may accelerate the maturity or call this account at our option on any maturity upon 30 days written notice." A lot of people could get stung by this as it is BURIED in the fine print. Nowhere else does FNBO mention that this is a callable CD. Beware!

Comment #6 by Anonymous posted on
FNBO!! LOLROFLMAO. Anyone know if this bank continues to horse whip and threaten its customers? Now they're offering a callable CD without full explanation and disclosure - why am I not in the least surprised! This is an OPEN forum. Anyone is permitted to post here. This includes employees and management of FNBO. Any others who promote this "bank" have a **** or two loose. I have done business with literally tens and tens of banks. This is the worst. Period.

Comment #7 by Anonymous posted on
I've had a savings account with FNBO since the early days of their now deceased 6% promotion. But at present, I'm keeping just $1 in it to keep the account nominally alive.

Given FNBO's track record that other posters have alluded to, I wouldn't open any new account with them unless the circumstances were REALLY dire.

They never did anything really bad to me personally, except for having received some threatening bank e-mails, supposedly sent by mistake. When it came time to pull my $XXK deposit, I ACHd out without any problem.

But, when you see their past pattern of generally treating their customers poorly in a range of small fiascos, it left many account holders, including myself, feeling like they're a small time operation that either can't shoot straight, or has not the slightest idea of how to maintain a professional banking relationship.

If the deal about the not disclosed callable CD issue is in fact true, it's just another nail in their coffin.

John, from Los Angeles

Comment #8 by Anonymous posted on
I had major problems getting my money out. When PenFed offered the 6% CD's I joined and had the credit union do an ACH pull from FNBO to fund the CD's. Initially the funds were sent, than pulled back by FNBO. I waited a few days expecting to see my accounts openned at PenFed. Nothing showed, so I called and was told my money had bounced back.

PenFed than tried to do a electronic check to get my money, but than it bounced back saying FNBO had put a "freeze" on my account.

I called FNBO and they assured me there was no "freeze" and didn't know why my money would not go through.

In the mean time, this had taken almost 2 weeks to get nowhere and the 6% deal was set to end in a day.

To make a long story short, after over 3 weeks and close to 20 calls I was finally able to wire the money out of FNBO. By this time the 6% offer was over.

After 6 more calls to PenFed talking to 3 different bank managers and finally convincing the head manager, PenFed did finally allow me to to get the 6% rates.

I was hit with fees for insufficient funds for transactions that did not go through and at one point my PenFed savings account showed a negative balance. These were eventually waived, but I still lost much time and money from the fiasco.

I'm not sure if this was all FNBO's fault, because some of the incompetence seemed to be on PenFeds end, but neither would admit wrong doing.

In hind sight, I should have done a wire in the first place, but the CD's were not very big and I wanted to save myself the fees. I had started the process in plenty of time to get it done with ACH, and I was told there had never been a problem. Boy, were they wrong.

Comment #9 by Drew Miller (anonymous) posted on
Drew Miller
I was able to signup for the billpay account online, and was approved the next day. No waiting for a letter to my home for me!

Comment #10 by Anonymous posted on
I have had no problem whatsoever with FNBO. I have a savings account, billpay account and credit card. All were opened quickly and seamlessly. No problems. Solid Bank!