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Bank of Internet's New Advantage Savings Account with a 2.50% APY - Nationally Available


Bank of Internet USA
Update 11/21/09: The rate has fallen to 1.60% APY. Refer to the bottom of the post for the rate history.

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
Note the lack of the electronic ACH bank-to-bank transfer feature. The bank has said many times that such a service is planned, but we continue to wait.

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 (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.

Rate History:
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

  Tags: Bank of Internet USA, savings account

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Comment #1 by Anonymous posted on
It is a small bank. Once the object of new money is fulfilled, the rate will drop immediately. It happened with their MM and regular saving accounts in the past many times.
I would not count on this rate to last more then a month or two, depending of the number of new accounts opened. Chasing rates is just a waste of time.

Comment #2 by Anonymous posted on
Going the snail mail rout is not my thing. By the time you open the account, fund the account and let it settle the wait period for the funds to be available, at least a month will pass by without any access to your money. I'm passing on this offer. Short time CD is better option for me.

Comment #3 by Anonymous posted on
Initial funding can be done by an ACH transfer or by check

Anyone know how long it takes to open the account with an ACH transfer? How fast is this ACH transfer (i.e. how many days of interest would be lost from the source account)?

Comment #4 by Anonymous posted on
Few months ago I opened en account with them and it took 6 additional days funding it with the ACH, since they will not pull the money until the account is officially opened.
You will be better of sending a check with the signature card instead of using ACH. All in all it took them 22 days to open the account and let me use the internet site. Not worth it to do it again for lousy 0.5% difference.

Comment #5 by Anonymous posted on
I also opened an account 6 months ago. After sending the signature card with a check, I received the welcome package 2 weeks later.
Actually from the moment of applying online to going to their web site to do banking, it took 24 days.
I will not do it again.

Comment #6 by Anonymous posted on
I agree with the previous posts.
Small bank like B of I will reach their goal for new money in a month or two.
Since, opening an account will take almost a month, I would not count receiving interest for one month.
If you include holding period of 10 business days on your deposited money, what is the point of opening such lousy deal.
I bet anyone that the interest rate will fall bellow their savings rate in less then 3 months.
Any takers?

Comment #7 by Anonymous posted on
I just spoke with a CSR at the bank and was told that the rate may drop any time and is not guaranteed to last even one day.

The reason for this is that they have number of loan applications not funded yet and the easiest way to get to cheap money is this exotic saving with useless bill pay via USPS mail.

I wouldn't bet the previous poster either, concerning the interest rate lasting any meaningful time.

Comment #8 by Anonymous posted on
I will not wast my chexSystems inquiry for B of I saving account.
I will not bet that their interest rate will last more the 3 months either.

Comment #9 by Anonymous posted on
I've had a savings account at BofI for about six months. I've left it open since its interest rate (2.06%) is still 6 basis points above my main account at Ally.

As soon as BofI's interest dips below Ally, I'll close BofI and consolidate at Ally.

BofI deserves credit for one thing: It posts its historic interest rates (going back 60 days) so you can easily see how much movement there's been over that period. Ally, which claims all sorts of "transparency," should copy this feature:

Comment #10 by Anonymous posted on
My experience with BofI earlier this year was this: while customer service was indeed good, the rate cuts will shortly (and surely)follow.
As a previous reader put it, it is not worth the trouble to move funds around only to have to do it once again within less than 3 months or so.

For liquid funds, I think the Ford Interest Advantage account is good for the short term. Ford Motor Credit is not going into bankruptcy anytime soon, and I think the present rate environment is such that if a saver is willing to keep an eye on auto industry tidings, this might be a viable alternative until such time as banks and credit unions offer decent returns once again.

Comment #11 by gaelicwench (anonymous) posted on
I've been a customer of Bank of Internet for quite some time now. Rather than count on snail mail for deposits, I've linked my B of I MM to an existing/external checking account; each month I do an ACH just as quickly as I've done with FNBO and ING. Now those are two very slow moving online banks when it comes to ACHs. *eyeroll*

I may go ahead and switch from money market to their saving account. The caveat is that I am currently using the mm as my veterinarian account every so often. The account comes with a debit card and a book of checks.

Comment #12 by Anonymous posted on
Beware. They seem to be having a big security problem. I received someone else's signature card & they presumably received mine. Their CSR admitted that I was not the only one to complain about this happening. So, now I have all of a stranger's personal information, including their account number! This is a sure invitation to identity theft. Many people may not realize that their signature card was sent to the wrong person because they send out TWO copies of the signature card. If you only received ONE, the other copy probably went to the wrong person.

Comment #13 by Anonymous posted on
I just received signature cards from other people, none was mine.
Called them at once and canceled the opening of the account.

That is what is happening using snail mail and not competent employees. I will never again open another account with B of I or even apply for.
Probably my private info is enjoyed by a person that could commit crime with my info, like opening accounts at other banks or selling it to the organized crime syndicates.

Comment #14 by Anonymous posted on
All these online savings are similar, rate drops very very soon. I closed all my nine online savings (Emigrant, Dollar, HSBC, FNBO, IGO, Amboy, etc.) recently and keep only Ally and BofA (for my regular checking).

Comment #15 by Anonymous posted on
Took me 2 months to open account. (slow mail)

When I looked at the account online, the $500 was withdrawn!

Turns out someone else got my account #.

Still waiting to get my $500.


Comment #16 by Anonymous posted on
I am an existing customer of BOI for over 5 years. I recently tried to open on-line (only way you can do it) a couple of new accounts, funded via an ACH debit to existing checking account at BOI. It took about 2 weeks to accomplish.

You should note that if you have a residence address different from your mailing address (like PO Box), they will mail the new account signature card to your residence address although you may have indicated a different mailing address. Do not know what this proves. I have bad mail service in my So Ca condo development, so I use a PO Box.

I ask recently when they were going to add a customer generated ACH service and they said they are still developing this technology. Seems like they don't want to do what many other internet division banks want to do and have already done. Not sure why they are soooooo against this service. Maybe not enough customers have complained about this issue? Hello, if you're an internet only based bank, how could you NOT offer this service?

Just my two cents.

OC Steve

Comment #17 by Anonymous posted on
The advantage savings rate has fallen again today to 2.02%.

Comment #18 by Anonymous posted on
Poor excuse for a bank.