Competitive Online Savings Account at SFGI Direct
Update 12/03/10: The rate has increased from 1.26% APY to 1.41% APY. Refer to the bottom of the post for the rate history.
SFGI Direct is a new internet bank from Summit Community Bank. It's offering a very competitive rate of 2.25% APY (as of 7/25/09) on a no-minimum savings account. In addition, from the bank's FAQ, it appears to have some nice ACH bank-to-bank transfer features. These include:
- You can link as many external accounts as you would like (appears to have changed as of 9/30/09)
- There is no maximum dollar limit of any single External Transfer to or from any SFGI Direct Savings account
- Electronic transfers between SFGI Direct and other banks are free and generally take 2 banking business days (one day would be better, but at least they specify an expected delay)
Some downsides that I've found include:
- Minimum initial deposit is $500 (new as of 9/30/09)
- There is a limit to your total initial deposit of $25,000 (I always prefer making a small initial deposit so this isn't a big deal for me)
- Limit of only one linked external account for ACH transfers (new as of 9/30/09)
- all withdrawals from the account must be done though the SFGI Direct Internet Banking (appears to block ACH transfers initiated from your other banks) As of 10/26/09, this has been replaced with "You can withdraw funds either through your SFGI Direct account or another institution."
- No beneficiaries. At this time only individual or joint accounts are offered using the online application
- must be a U.S. citizen or U.S. resident alien to open your account online (according to first page of application)
The online application uses andera.com which is common for online applications.
I just learned of this internet bank today after a reader sent me email. I wasn't able to call during their Saturday hours of operation. I'll call on Monday for more details. I haven't been able to confirm this internet bank with 100% certainty, but I'm reasonably sure it's legitimate. Seeing that they use andera.com as their application gives me some confidence. Unfortunately, the bank's FDIC page lists a primary web address that goes to an under construction page. I believe the primary bank's web address is mysummit.com. The toll-free phone number on this page matches the one listed at SFGI Direct.
Update 7/27/09: I called the toll-free number (877-776-9722) and verified that SFGI Direct is part of Summit Community Bank. They launched SFGI Direct about 2 months ago. The CSR didn't know how long the rate would last, but she did say they intend to remain in the top 5 for the best rates. According to the CSR, the application process does not perform a hard credit inquiry. It's only a soft pull via Equifax. They also use ChexSystem.
According to the About SFGI Direct page:
SFGI Direct is an online division of Summit Community Bank where you can bank safely and easily with competitive rates on a savings account.
Summit Financial Group, Inc., the owner of Summit Community Bank, is a financial holding company which provides community banking and insurance services. Summit’s community banking operations consist of 15 banking offices located in the Eastern Panhandle and South Central regions of West Virginia and the Shenandoah Valley and Northern regions of Virginia.
And regarding FDIC coverage:
Customers who bank with SFGI Direct, A division of Summit Community Bank can feel safe knowing their accounts are covered by FDIC Insurance up to applicable limits. SFGI Direct, A division of Summit Community Bank and Summit Community Bank are the same Federal Deposit Insurance Corporation (FDIC) Insured institution.
Summit Community Bank has been a FDIC member since 1995 (FDIC Certificate # 34102). The bank's ratings for safety and soundness are a little weak: 2 stars (problematic) at BauerFinancial and 2 stars (below peer group) at Bankrate.com. Both ratings are based on 3/31/09 financial data.
I don't see any guarantee that SFGI Direct will keep the 2.25% APY for a certain period of time, so the bank is free to lower the rate at any time. It's not a small bank with $1.58 billion in assets and $965 million in deposits. So it should not be quickly overwhelmed by deposits. But as is common with banks, once they build up their deposits, they may lose an incentive to be a rate leader. It's definitely frustrating to open a new account only to see the rates plummet within a few months (or within a few days as we've seen in some cases). At least SFGI Direct lacks minimum balance requirements and monthly fees. It should be easy to move your money if rates do plummet. Hopefully, the bank will realize this and keep rates competitive.
So is it worthwhile to open yet another new internet savings account? I discuss this issue in this post.
Thanks to the reader who sent me email on this new internet bank.
For other high yield savings accounts, please refer to my weekly rate summary.
- 12/13/12: 0.94% APY
- 02/09/12: 0.91% APY
- 10/28/11: 1.01% APY
- 08/15/11: 1.11% APY
- 06/25/11: 1.16% APY
- 04/04/11: 1.21% APY
- 02/19/11: 1.31% APY
- 12/03/10: 1.41% APY
- 10/01/10: 1.26% APY - now accepting new applications
- 08/06/10: 1.35% APY
- 05/25/10: 1.51% APY
- 04/08/10: 1.65% APY
- 02/26/10: 1.75% APY
- 11/13/09: 1.85% APY
- 11/06/09: 2.25% APY - stopped accepting new applications
- 09/30/09: 2.25% APY - now accepting new applications
- 08/10/09: 2.25% APY - stopped accepting new applications
- 07/25/09: 2.25% APY
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