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ETrade Super Bowl Commercials - What Happened to ETrade Bank?

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E*TRADE Bank

ETrade advertised heavily in yesterday's Super Bowl. They came out with more of those talking baby commercials. Did you notice that they didn't mention ETrade Bank? As you can probably tell just by looking at ETrade Bank rates, all the focus is on their brokerage and not the bank. ETrade has mentioned this in their quarterly results. Here's what MarketWatch reported after ETrade released its latest quarterly results:

E-Trade built a banking business too and this part of the company has suffered as the housing crisis left it with big mortgage-related losses. E-Trade is now trying to shrink its banking business to focus on its main brokerage unit.

Based on ETrade Bank's deposit rates, they should be doing a good job at shrinking their banking business. Their 3-month CD is currently paying an extremely low 0.01%. That's one-hundredth of a percent! Even their 5-year CD rate is very low at 1.10%. I hope no one is letting their CDs automatically renew.

ETrade Bank's Complete Savings Account used to be a very competitive online savings account, but that changed in 2009. By May 2009 the rate had fallen to below 1%, and by October the rate had fallen to its current level of 0.50%. As a comparison, ING Direct's Orange Savings Account (which has never been a rate leader) is currently 1.20% APY.

What's disappointing is that ETrade Bank has lots of nice internet banking features such as its ACH bank-to-bank transfer service which it calls Quick Transfer. The transfers are fast, they don't place small limits on the amount that can be transfered and it's easy manage links to the external accounts (although there is an issue with a lifetime limit on the links). So I'm sorry to see ETrade give up in keeping competitive rates.

I was glad yesterday's Super Bowl wasn't a blow-out. I remember many past Super Bowls when the game was won by the third quarter, and for the rest of game the teams basically gave up competing. Watching ETrade Bank reminds me of watching the last quarters of those past Super Bowls.

Edit: fixed some typos


  Tags: E*TRADE Bank

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Comments
11 comments.
Comment #1 by AngeloFrank (anonymous) posted on
AngeloFrank
ETrade is just following the lead of all financial institutions that have brokerage houses. When stocks are hot they push their brokerage services. When the markets plunged in 2008-2009, there were no brokerage ads to be sseen on TV. In another two to three years, when deposit rates get back to a logical level perhaps you will see an ad for ETrade Bank and the others.

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Comment #2 by Anonymous posted on
Anonymous
I have kept my Etrade Complete Savings account opened with $1 in it just as a hedge that someday they will be competitive again.

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Comment #3 by William (anonymous) posted on
William
The rep I spoke with said I could keep my Complete Savings open even if the balance was zero cents for a year or more. The trick is to log on and hit a few buttons every so often and at the end of the year the bank won't send you a "do you want to close this account?" letter if they see even this minimal activity. I do plan to ACH a small amount once in a while since their ACH is so fast. It's good for keeping other account alive that require some sort of activity. I hope some day their rates get competitive.

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Comment #4 by cactus posted on
cactus
You said that they have "mange links" <smile> Freudian slip?

The interesting thing about the baby ad that I saw was that it was extolling fast online trading at odd hours. In other words, promoting day trading - which is the sure way for civilians to lose money in stocks.

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Comment #5 by KenBDG posted on
KenBDG
Thanks cactus for the catch. I must have been thinking of those low rates when I left out the a.

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Comment #6 by Anonymous posted on
Anonymous
Etrade Bank has been losing money and appears to be trying to pay out as less as possible on their accounts.  They jettisoned one of the CEOs from Telebank that they bought out when they wanted to add an online bank to the brokerage division.  The company's original focus was on the brokerage division before they expanded into the banking business.  I had one rather unpleasant experience with one of my savings accounts there a few years ago. They placed my account with a freeze after it had been active for a while without informing me about it.  I set up an EFT transer between two of my accounts that I had with them and the transfer was cancelled due to unspecified problem.  I asked the rep about this and she couldn't find any reason why the request was rejected.  I got hit with a NSF charge which they refunded back to me.  I remember the bonus money that they offered for opening accounts in the late 1990s to early 2000s.  I picked up several hundred dollars of extra money from fulfilling the promotions.

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Comment #7 by Anonymous posted on
Anonymous
Error in previous post. I meant it had been INACTIVE.

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Comment #8 by John C. (anonymous) posted on
John C.
I ran up against the E-Trade Bank limit on number of linked external accounts one time when one of my requets was frozen, and I couldn't figure out why. Finally found out when I called and inquired. Ended up talking to a supervisor, who reset my account and allowed me to make additional changes. Haven't had any further problems since then, and my number of linked accounts probably bumps at or around the 15 limit. I'm sure I haven't reached the supposed 100 link lifetime limit as yet.

I don't keep any money with E*Trade Bank for the purpose of earning interest. But I did transfer my IRA to their brokerage side some years ago, and their brokerage web site is great for those who want to self-manage. As for the bank, I use it as the central transfer station for my various funds, money coming and going from other accounts, since their online transfer function is pretty good.

Even without meaningful interest, they in general have no balance requirements, no monthly fees if you configure your accounts properly, and a very good web interface. As long as those things remain in place, I'll remain as their customer.

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Comment #9 by Anonymous posted on
Anonymous
just got this email:

 

We are writing to let you know that your E*TRADE Bank account referenced above will soon be transferred to Discover Bank, and become a Discover Online Savings Account. This follows our plan to focus more exclusively on providing optimal investing solutions to our customers. We expect the transfer to occur on or about March 7, 2010.

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Comment #10 by Anonymous posted on
Anonymous
Just got the same email.

 

 

 

We are writing to let you know that your E*TRADE Bank account referenced above will soon be transferred to Discover Bank, and become a Discover Online Savings Account. This follows our plan to focus more exclusively on providing optimal investing solutions to our customers. We expect the transfer to occur on or about March 7, 2010. If you have already closed your account, please disregard this message. 

 

Transferring your savings account will provide you with these important benefits:

 

 • Rates that are at least 5X the national average¹ – currently 1.35% APY²

 • Continued FDIC insurance up to $250,000 per individual accountholder³

 • No minimum balance requirement

 • Banking Specialists available 24 hours a day, 7 days a week

And you'll still enjoy fast and free online money transfers4, direct deposit capabilities and secure, 24/7 online access you enjoyed at E*TRADE Bank. For more information on Discover Bank's Online Savings Account, visit DiscoverBank.com/welcome.

 

If you have any other E*TRADE Bank or E*TRADE Securities accounts, this transfer will NOT affect them in any way.

 

Please note the following:

 • While the account transfer is pending, you can access your account online as usual and continue to use Quick Transfer to make individual and automated deposits.

 • Seven calendar days prior to the account transfer, Quick Transfers from accounts outside of E*TRADE will no longer be processed. Please take the time to delete any scheduled or recurring Quick Transfers you have for your account by this date.

 • Any checks you wish to deposit must also be received at least seven calendar days prior to the transfer. Checks received after this deadline will be returned to you by mail.

 • Direct deposits will be accepted up until March 5th, 2010. Direct deposits that come in after March 5th will be returned to the sending institution.

 • Past statements and tax documents will continue to be available on etrade.com after the transfer is completed. Your account history will not be transferred to Discover Bank.

 • The current mailing address we have on file for you is: XXXXX

If this address is not current, please visit etrade.com and update your information.

 

Discover Bank will send you a welcome letter approximately five days before your account is transferred with complete details on your new account, including your new account number, an account agreement and information on how to register for Online Banking. After you register, you can set-up online money transfers and redirect any direct deposits to your new Discover Online Savings Account. In the meantime, if you have any questions, please feel free to contact us at 1-800-ETRADE-1 (1-800-387-2331) anytime, seven days a week or visit DiscoverBank.com/welcome. 

 

We are working hard to make this transition as smooth as possible. We've appreciated having you as an E*TRADE Bank customer.

 

Sincerely,

 

 

 

Robert V. Burton

President and Chief Operating Officer, E*TRADE Bank

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