Bank of Internet USA has launched a new high yield savings account called Advantage Savings Account. As of 7/07/09 it pays 2.50% APY on all balances. The features are very similar to their High Yield Savings Account except that it also provides limited Bill Payment. It allows you to make up to 3 Bill Payments per month. The limit of 3 is likely due to Bill Payments being considered checks, and money market accounts are limited to no more than 3 checks per month as required by regulation.
Since the account is very similar to the High Yield Savings Account which is currently paying 2.06% APY, it makes this 2.50% APY look like a teaser rate. There doesn't appear to be any guarantee period, so the rate could change at anytime. However, BofI doesn't have a history of quick rate changes. So it's quite possible that this 2.50% APY could last for many months.
Here's a summary of the Advantage Savings Account features:
- 2.50% APY on all balances as of 7/07/09
- $100 min. initial deposit required
- No monthly maintenance fee
- No minimum daily balance required
- Up to 3 Bill Payments per month
- ATM card available
- Interest is compounded daily and credited monthly
- Initial funding can be done by an ACH transfer or by check
- Allows joint accounts, Trust accounts and UTMA accounts (custodial accounts for minors)
- You can include multiple beneficiaries in the application and choose the ownership designation of POD, ITF or ATF
- No ACH transfer service available
- Accepts ACH transfers initiated from another bank
Update 8/10/09: I've read reports on Fatwallet that the Advantage Savings Account is considered to be a checking account if you're trying to create a link to it at an online bank which provides an ACH transfer service. If you label it as a savings account when you're trying to create a link, the trial deposits will not go through.
One downside of opening an account at BofI is that it's a slow process. Readers have reported that it uses more snail mail than the internet. After you fill out the online application, you still have to mail in a signed application, and it needs to be returned before they do the initial ACH debit to open the account. A reader has reported that past applications have taken 1-2 weeks and involes a lot of USPS mail.
Another downside is BofI's Bill Payment service. Readers have reported that their Bill Pay service is very slow. Here's a comment a reader left:
I have a checking account with them and occasionally use their bill pay system.
It is so slow then it takes about 10 business days to reach the final destination. I could walk 1000 miles to the place to pay the bill then waiting for the bank to pay it for you.
They use the USPS to send checks even if the payee is across the street. They process the bill pay once a week and rely on snail mail for delivery. Once they receive the sent check back from the payee which can be another week, then they will proceed to release the funds. Frustration is mild form of describing the bill pay process.
One positive note about their Bill Pay Service that a reader mentioned is that the money is not debited from your account until it is presented for payment.
It's ironic that one of the oldest pure internet banks (opened on July 4, 2000) lacks an ACH transfer service and still depends so much on snail mail.
On the plus side, readers have reported good customer service:
[S]o far the customer service has been good. They answer their emails. You can reach a live customer rep without a long wait on hold. They place no dollar limits (except for 6 per month) on ACH withdraws. You can make unlimited ACH deposits. Both deposits (except initial) and withdrawals have to be initiate by an external account.
Update 7/15/09: A couple of readers reported receiving signature cards from other people. I asked the bank about this incident, and here is the reply I received:
A few Bank of Internet customers contacted us last week regarding this matter. We have identified the issue and are happy to report it's an isolated incident due to a technical mail sort error. Our staff caught the error quickly and fixed the problem.
Bank of Internet is asking any customer who received incorrect account agreements to contact us at (877) 541-2634. To ensure your account remains secure, we will be re-issuing new account numbers to these customers. The account information you received in the mail will be cancelled and a new account number assigned to you. Our goal is to provide our customers with a safe and secure process for handling their banking transactions. We appreciate your business, and apologize for any inconvenience.
BofI's ratings for soundness have remained the same over the last year: 3 stars (performing) at Bankrate.com (based on 12/31/08 data) and 4 stars (excellent) at BauerFinancial (based on 3/31/09 data). The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).
Thanks to the reader who emailed me news of this new account.
For more info on Bank of Internet and its High Yield Savings Account, refer to this post.
For other high yield savings accounts, please refer to my weekly rate summary.
11/16/09: 1.60% APY
08/29/09: 1.65% APY
08/18/09: 1.85% APY
08/04/09: 2.02% APY
07/28/09: 2.25% APY
07/07/09: 2.50% APY