Dedicated to Deposits: Deals, Data, and Discussion

4.08% 12-Month Online Installment Savings Account at Nara Bank - CA, NY, NJ Only

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Update 3/28/09: The Installment Savings Account is no longer listed at Nara Bank's website. The online savings account and CD rates have fallen. Please check the bank's website for the latest rates.

Nara Bank is offering a special savings account called the Online VisionII Installment Savings. Instead of making one initial deposit, you agree to monthly deposits. At maturity, the balance equals the sum of all the deposits plus the accrued interest. When you open the account, you specify the maturity balance (the contract goal amount). Minimum contract goal is $1,000. Based on that amount, you then make monthly deposits. As of 3/22/09, these rates include 4.08% APY for 12 months, 4.34% APY for 24 months and 4.86% APY for 36 months.

One example they give is a goal amount of $10,000 and a monthly payment of $815.45 for a 12-month term. Without earning any interest, the 12 payments would equal $9,785.40. Adding the interest earned from a 4.08% APY would add another $214.60 to make the maturity balance equal to $10,000.

If you had a regular savings account with let's say a 2.00% APY, you'll earn only about $94 during the year. The downside with a savings account is that the yield isn't guaranteed to last through the year.

This Nara Bank page has further details of this account. One important note is that if you withdraw any amount anytime other than at maturity, you must withdraw the entire balance and close the account, and an early withdrawal penalty may apply on the entire balance.

Except for the monthly deposits, this account is more like a CD than a savings account. But when compared to CDs, the rates are still much better than any CDs with similar terms.

You can apply online; however, it's limited to residents of California, New York and New Jersey.

Competitive Short-Term CDs and Money Market Account

Nara Bank is also offering other competitive online accounts including short-term CDs. As of 3/22/09, the rate is 2.52% APY for terms of 3, 4, 5 and 6 months. There's also a money market account with fairly competitive rates.

3.10% 12-month Add-On CD Until 3/27/09

Nara Bank is still offering the special Mega Promo CD. It's an add-on 12-month CD with a 3.10% APY. The end date appears to be on 3/27/09. This isn't an online offer, so it appears to require a branch visit. I have more details in this post.

Branches are located in Los Angeles and several other cities in Southern California. The bank also has branches in Northern California and in New York and New Jersey.

Nara Bank has some decent ratings for safety and soundness: 4 stars (sound) at Bankrate.com (based on 9/30/08 data) and 4 stars (excellent) at BauerFinancial (based on 12/31/08 data). The bank has been FDIC insured since 1989 (FDIC Certificate # 27530).

Thanks to the readers who emailed me news of this installment savings account.

Related Pages: New York, California, CD rates, New Jersey, Nara Bank, savings account

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Comments
35 Comments.
Comment #1 by Anonymous posted on
Anonymous
It's difficult to tell if the rate is fixed though the lifetime of this savings account. I assume it is since they don't let you withdraw without penalty. But they don't explicitly say so on their web site.

Also, if anyone finds out if they will allow a lump some payment up front instead of monthly payments, let us know.

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Comment #2 by john (anonymous) posted on
john
I believe HANMI has had this or something like it for a while.

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Comment #3 by Anonymous posted on
Anonymous
Question: It's difficult to tell if the rate is fixed though the lifetime of this savings account?

Answer: It implied that the rate is fixed. (You're right, they they don't explicitly say so on their web site).

For example, 12 months $50,000 Vision II

Your total deposit: 4077.23 X 12 = 48926.76
Your interest payment: 50,000 - 48926.76 = 1073.24

Thus, it's not possible for them to lower the interest and let me meet your Goal ($50,000)
for example, they lower the rate to zero after 1 month, then you will only get 1 month interest of 4.08%. How can you satisfy your goal ($50,000)?

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Comment #4 by Anonymous posted on
Anonymous
To Anonymous @ 5:04 PM:

The rate is fixed.
As to an upfront lump sum payment in lieu of monthly deposits, the bank won't allow it; if they did, the final amount at maturity would be quite a bit more than their stated goal.

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Comment #5 by Anonymous posted on
Anonymous
Can be a bad deal because you have to deposit the fixed amount on the same day of each month. If deposited early, you lose those few days of interest. If late, there is a some kind of penalty. If you pick the $50,000 for 1 year, the monthy deposit is over $4,000. The lost float in keeping this kind of month available to deposit on a certain day each month for 11 more months (after the first deposit) will reduce the 4% yield somewhat.

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Comment #6 by Anonymous posted on
Anonymous
I have tried to do the math using the numbers shown every which way possible but nothing seems to tie up. Either the monthly installments or apy are wrong on the bank's chart. Please look at this type of an account more closely. It reminds me of a zero coupon bond.

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Comment #7 by Anonymous posted on
Anonymous
Hey man,

You're probably not good at math. Take the 12 $50,000 example, that is very similar to a $25,000 CD (Can you figure it out why?)

Here is the APY (approximately) = 1073.24 / 25,000 = 4.29.

So, the 4.08% APY is about right. Hope it helps!

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Comment #8 by Anonymous posted on
Anonymous
FAQ:


1. Are the rate fixed though the lifetime of this savings account? (They’re saving account, but I assume they are fixed, but you never explicitly say so on the web site) – Yes it is.
2. Is it possible to allow a lump sum payment up front instead of monthly payment? – Unfortunately it is impossible.
3. When automatically transferring Monthly deposits from an account in another financial institution, should the transfer be initiated from NARA side? Or from the side which the customer holds a checking account? – Monthly transfer should initiated by your institution where your checking account resides.
4. Do you know when the promotion will be ending? – We do not have ending date of this promotion. However, offering rates can be change subject to change without notice.

Hope it helps!

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Comment #9 by Anonymous posted on
Anonymous
I filled out the Online Application. I selected the $100K goal for 12 Months. This amounts to $8154.46 deposit and monthly payments in the same amount.
I received a confirmation # and I should receive a Welcome Package in 2-3 business days.

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Comment #10 by Anonymous posted on
Anonymous
For a long time, I want to test my payment ability and behavior when I buy a home later. This is a good account to test that on myself..
1) Can I pay $XXX amount every month?
2) Can I pay them on time each month?
3) What are the side affects etc...

I may go with some small target but helps me to understand..

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Comment #11 by Anonymous posted on
Anonymous
Response to Anonymous above who is doing $100,000:

He (or she) said his monthly deposits will be $8154.46 for twelve months.

So, $8154.46 x 12 months =

$97,853.52. (So, he will have given the bank $97,853.52 total for the year.)

The bank will make his balance $100,000 when the year is up. $100,000 - $97,853.52 = $2146.48.

If you divide $2146.48 by $97,853.52 you will see that the percentage of interest is only 2.2%. So, where does the 4% come in? What am I missing here?

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Comment #12 by Anonymous posted on
Anonymous
Anonymous 12:12, if you just contributed $97,853.52 up front and got back $100,000 in a year, that would indeed be about a 2% APR. But that's not what you're doing -- you're putting in $8154.46 per month, which means that, ON AVERAGE, they are holding only about half that much, or $48,926.76, of your money. Getting $2146.48 in interest in return for letting the bank hold $48,926.76 of your money is about a 4% APR.

LH

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Comment #13 by Anonymous posted on
Anonymous
I totally agree with the anonymous blogger above, what am I missing here as well. Some of these people here must have failed math class in school. If you take 10K at 4.08% APY for 12 months it would equal $408 dollars in interest. The bank's offer would only equal $214.60 in interest.

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Comment #14 by Anonymous posted on
Anonymous
If you deposit $100k up front, you will get $4080 for a year (4.08%), but right now you deposit your money from 8000 to 98000, so the average of your deposit is about $50k, so, that is why you will get $2k interest, but the rate is still 4.08%. got it?:)

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Comment #15 by Anonymous posted on
Anonymous
BTW -- If you can prove that they advertise 4% APY but paying you only 2% APY, you'll absolutely sue them for deceiting. But I don't think it is the case. The main reason is that some ppl have failed to pass math class in school:)

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Comment #16 by Anonymous posted on
Anonymous
The max the online account-opening page allows is 50k, not 100k, so I question the above poster's authenticity. More importantly, THESE PEOPLE BARELY SPEAK ENGLISH, AND THEY DON'T GENERALLY ANSWER THE PHONE. TERRIBLE CUSTOMER SERVICE. STAY AWAY.

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Comment #17 by Anonymous posted on
Anonymous
This bank's Installment Savings program is geared towards the investors looking to invest a stream of payments rather than the ones with a large lump sum upfront. For the latter, the 3.10% APY Add-on CD will fare better.

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Comment #18 by Anonymous posted on
Anonymous
***This bank's Installment Savings program is geared towards the investors looking to invest a stream of payments rather than the ones with a large lump sum upfront. For the latter, the 3.10% APY Add-on CD will fare better.****

It is not true, for example, you have $100k and you open the saving (4.08%) and keep your money in GMAC saving (2.5%).

Assume the rate in GMAC is unchanged, the average rate is about: (4.08+2.5)/2 = 3.29 > 3.1

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Comment #19 by Anonymous posted on
Anonymous
The so-called online process gives you no account number, so you have to wait for a week to get it in the mail. They don't speak english well, so talking to them is immensely frustrating, and when they finally give up and take a message for someone who might be able to help, you don't get a call back. They accept ACH but don't originate them. For $100k it's just not worth the continual headaches this account generates.

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Comment #20 by Anonymous posted on
Anonymous
It is a korean bank, but they reply email pretty quickly tho.

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Comment #21 by Anonymous posted on
Anonymous
"Assume the rate in GMAC is unchanged..." That's a pretty big assumption in the time of QE; and there's also the ACH slippage issue...

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Comment #22 by Anonymous posted on
Anonymous
I have a question for someone who has opened this type of account with Nara Bank. If deposits must be made via automatic transfers, and yet they do not initiate ACH transfers, then how is the opening deposit made?

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Comment #23 by Political news (anonymous) posted on
Political news
i may open nara checking and or money market after i go to the branch. have the add on 12 month with 10k now

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Comment #24 by Anonymous posted on
Anonymous
I would rather invest my money into a CD the conventional way, where I receive both the APY and interest for the full length of the term. This account seems to have more questions than answers on how it works and whats going to happen once you sign up. This type of creative investing is another reason why we are in the current banking mess.

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Comment #25 by Anonymous posted on
Anonymous
Just opened a 12 month promo CD at 3.10%, with monthly interest check and monthly statements. Opened the account in the name of our Living Trust. Something you should know about this account is that the maximum opening balance is $90,000, but you can immediately make additional deposits the same day or in the future.

For Living Trusts you do need to compete and have notarized a Trust Certification. Not all So Ca branches have in-house notary. The La Palma/Cerritos branch does not have a notary.

I am not Korean (the Bank is Korean owned) but the branch staff were very kind and careful to explain all the attributes of this account. This is a nice Add-on balance function, so if rates go down we have a way to keep the higher rate on additional deposits.

This Bank also received some TARP funding (about $65 Million), and is rated a 4-star Bank by both Bauer Financial and Bank Rate. The Bank is a little over $2 Billion in assets.

OC Steve

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Comment #26 by Anonymous posted on
Anonymous
It's very telling that they do not allow a lump sum payment. The reason is that they are counting on the float to earn them interest, plus penalties if you **** up. If you use ACH transfers you lose around 2 days interest, 4 if you get unlucky and your money is in transit over a weekend.

It's a big enough headache dealing with large ACH transfers let alone monthly ones. No thanks. My time is worth too much per hour to deal with this or Rewards checking hassles.

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Comment #27 by Anonymous posted on
Anonymous
1. What does "****only one deposit is allowed per month****" mean?
When I called my institute, they said they will have to make two deposits into my account, let me verify the deposits before any ACH can be initiated. Are these deposits allowed to be made to my Nara account?

2. At the end of the one year term, Can I initiate a ACH from my other institute to withdraw the money?

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Comment #28 by Anonymous posted on
Anonymous
I have the same questions to them, but when I emailed them yesterday. I haven't received any answers back from them. will let you know if they reply my mail.

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Comment #29 by Anonymous posted on
Anonymous
As I wrote before, CUSTOMER SERVICE IS TERRIBLE. Which part of TERRIBLE don't you understand? They don't answer the phone at all sometimes, when they do answer it's a person who uses english as a second language, i.e., badly; the 'online' process is actually nothing but a form generator which they take a week to mail to you; they take 2 days to return a phone call; T_E_R_R_I_B_L_E, so not worth it.

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Comment #30 by Anonymous posted on
Anonymous
Giviiiiiiiiiiiiiiiiiing up!
....Sounds too much hassle....

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Comment #31 by Anonymous posted on
Anonymous
The online MMA rate has sharply dropped (now tiered from 0.75% to 1.26%), the CD promo has too (now 1.51%). And its looks like the installment savings isn't even available any more; in any case, its no longer on the page showing online accounts available.

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Comment #32 by Anonymous posted on
Anonymous
Got this in an email from NARA today:

"We would like to thank you for your interest in our online account products. Regretfully, this message is to inform you that we are experiencing high demand of requests of opening accounts that may delayed on your internet new account application.

Our eBanking group is doing our best to meet your needs by complete new account packages and send by no later than April 10, 2009."

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Comment #33 by Anonymous posted on
Anonymous
I applied on 03/24 and got the same e-mail answer. I wanted to open this account to save for my property taxes (due April 10th) but they seem very unprofessional as to trust them any money.

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Comment #34 by Anonymous posted on
Anonymous
Just went to open a 1 Yr add-on. Will not be using the add-on feature and will be taking funds out at the end of 1 year and never looking back.. These people are just plain RUDE. Limited english, show no emotion or sincerity. Asked about also opening the periodic payment Cd, wouldn't do it. Said they need Id for a person under 18 years. First time I've used them and NEVER will again.

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Comment #35 by Anonymous posted on
Anonymous
They are colletcting our personal information on purpose. I am not sure if they are going to use our SSN etc. for improper usage (or something else). For now, please submit your complaint at BBB before taking more furthur actions. Thanks!

https://odr.bbb.org/odrweb/public/getstarted.aspx

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