Update 8/30/10: ShoreBank was closed by regulators. However, a new bank, Urban Partnership Bank, assumed all deposits and is continuing the Shore Direct savings account. In addition, the rates have gone up: 1.25% APY $100K+ and 1.20% APY for under $100K. Refer to the bottom of the post for the rate history.
ShoreBank has a new Direct High-Yield Savings Account with a yield of 5.00% APY. It looks like the typical online savings account. Only $1 is needed to open the account and earn the top yield. The 5% APY yield makes this very competitive in today's rate environment, but since it's a new account, the high rate is likely due to the account being so new.
One thing different about ShoreBank is its emphasis on social responsibility:
Unlike conventional banks, ShoreBank strives to meet three objectives simultaneously: to build wealth for all in economically integrated communities; to promote a healthier environment; and to operate profitably.
This aspect may be important for some in choosing an online savings account.
Below are the features of this online savings account. The bank has a decent FAQ page. I've also contacted the customer service rep (CSR) for some additional details:
- $1 minimum to open account and earn the top yield
- Interest is accrued daily and compounded monthly
- If you close your account before interest is credited, you will lose the accrued interest
- No ATM cards or checks
- Application process is all online
- Allows up to 6 linked accounts
- CSR wasn't sure if the credit check was hard or soft. ChexSystem is also used in the application process.
- Beneficiaries cannot be added (according to CSR)
- Your initial deposit will be available for withdrawal within 3-4 days after you confirm the two trial deposits to verify ownership of the linked account
- Subsequent deposits from your linked account will be available for withdrawal the day we receive your deposit (generally 2-4 days after the transfer was initiated)
- Funds transfered to a linked account will appear in 2-4 days (according on FAQ)
- Online statements are the default. Paper statements available with a fee.
Here is the list of fees. If you're careful, you shouldn't have to worry about these.
One unique feature I noticed in the FAQ is the "Pay People" option of the account. According to the FAQ you can e-mail up to $500 to another individual. Here is how it's described in the FAQ:
You will need to provide the person's first and last names and e-mail address, and to specify a secret word (which you should give to the person you are sending money). The recipient will receive an e-mail containing a link to a secure website. Using the secret word you have provided separately, he or she will then be able to provide additional information and specify an account into which the funds you are sending can be deposited.
This seems similar to ING Direct's Electric Check feature that's available on its Electric Orange account. One advantage over ING seems to be that you don't need to know the other person's account or routing number. The only potential problem with this ShoreBank pay-people service is that the person receiving the email may not trust clicking on the link and providing their account number at the website.
ShoreBank is based in Chicago, Illinois. It is FDIC insured (Certificate # 15640). The social responsibility aspect of the bank doesn't seem to be helping it maintain a strong financial condition. It has a rating of 2 out of 5 stars (below peer group) at Bankrate. BauerFinancial has a little higher rating for this bank of 3.5 out of 5 stars. Both of these ratings are based on 6/30/07 data.
Thanks to the reader who mentioned this new savings account in the finding deals post.
Financial Health Update 9/26/09:
- FDIC's Cease and Desist Order (pdf) dated 7/06/09
- 0 star (lowest) at BauerFinancial based on 6/30/09 data
- 1 star (lowest) at Bankrate.com based on 3/31/09 data
- 08/27/10: 1.20% APY under $100K; 1.25% APY $100K+
- ??/??/10: 1.03% APY under $100K; 1.19% APY $100K+
- 01/14/10: 1.09% APY under $100K; 1.25% APY $100K+
- 12/30/09: 1.70% APY
- 11/03/09: 1.95% APY
- 07/28/09: 2.15% APY
- 05/21/09: 2.05% APY
- 04/08/09: 2.45% APY
- 03/09/09: 2.80% APY
- 01/22/09: 3.15% APY
- 06/04/08: 3.50% APY
- 03/29/08: 3.30% APY
- 12/12/07: Had been offering a $25 new-account bonus. Offer ended on 3/29/08.
- 11/12/07: 5.00% APY