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Comparing the Online Savings Accounts from the Major Credit Card Companies

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When most people think of companies like American Express, Discover and Capital One, they probably think credit cards. However, if you're a saver, you might think of these companies more as internet banks which offer competitive savings accounts and CDs. All three of these companies have made a large investment in their internet banks over the last couple of years. I thought it would be interesting to compare these three banks and their online savings accounts.

Comparing the Credit Card Companies

According to CNBC, American Express is the fourth largest credit card issuer with $105.00 billion in credit issued. Capital One is the fifth with $68.78 billion credit issued and Discover is the seventh with $49.60 billion credit issued. The top three are Bank America, Chase and Citi.

Comparing the Banks

American Express Bank, FSB is the subsidiary of American Express that operates its internet bank. It has $14.4 billion in deposits. The other bank subsidiary is the American Express Centurion Bank which appears to be the main bank that supports the credit card business. It holds $13.4 billion in deposits. The total deposit sizes of the two banks is $27.8 billion.

Capital One entered the retail banking market with its acquisition of Hibernia National Bank in 2005. It has continue to acquire other banks, the latest being Chevy Chase Bank in 2009. Capital One Bank now has a sizable branch network in addition to its Direct Banking. Capital One has two bank subsidiaries: Capital One Bank (USA), N.A and Capital One, N.A. The Direct Banking deposits appear to be held by Capital One Bank (USA), N.A. Its deposit size is $27.6 billion. Capital One, N.A. has most of the branches, and it has a deposit size of $93.8 billion. The total deposit size of the two banks is $121.4 billion making it the largest of these three banks.

Discover Bank is the main bank subsidiary of Discover Financial Services. Discover acquired the Delaware bank Greenwood Trust Company in 2000, and this continues to be Discover Bank's only branch office. It's now essentially an internet-only bank with total deposits of $34.5 billion.

Comparing the Online Savings Accounts

All three banks offer online savings accounts that are free of monthly fees regardless of the balance. They all make it easy to open accounts online, and they make it easy to initiate online money transfers to and from your other banks. These features along with competitive interest rates are what you should expect from an online bank. The following is a quick comparison of the savings account features of these banks. Please refer to the top of the post for the latest interest rates.

  • American Express Bank FSB High-Yield Savings Account - There is no minimum deposit required to open the account. It has one rate that applies to all balances.

    I first reported on Amex in 2005 when they launched the Savings Accelerator Plan which was a savings account connected to the American Express One credit card. In June 2009 they launched a whole new savings account and internet bank called Personal Savings from American Express. This new savings account is independent of the credit cards. Since June 2009, the savings account rate has remained competitive.

    The savings account has several nice online banking features. One in particular is its bank-to-bank ACH transfer system. Transfers are fast. It's easy to link to external banks, and it allows for large transfer amounts. I have more details about its online banking features in my July American Express Bank Savings Account and CD review.


  • Discover Bank Online Savings Account - $500 minimum to open. It has one rate that applies to all balances.

    Discover Bank has been offering a money market account and CDs from its internet bank for several years (I first started reporting on the bank in 2006). However, the Online Savings Account was just launched in the summer of 2009. Since that time, the rate has remained competitive.

    Discover Bank did a major upgrade to its online banking interface in February of 2010. This made it much easier to open an account and perform many online banking tasks such as bank-to-bank transfers. I have more details in my February Discover Bank Account Center review.


  • Capital One Bank InterestPlus Online Savings - $1 minimum to open. $1,000 minimum balance to earn the top yield. Extra 10% quarterly bonus on interest earned with a monthly average balance of at least $10,000 or use of a Capital One credit card at least once a month. Costco members can open one with a yield that's 5 basis points higher.

    Capital One Direct Banking has been offering savings accounts and CDs for many years. I first reported on its savings account in 2005. However, the InterestPlus Savings account has replaced the old High Yield Savings account for new customers. The InterestPlus Savings account was introduced in late 2009.

    In the past Capital One suffered from slow ACH bank-to-bank transfers, but improvements have been made in the last year. Its ACH transfer service is now top notch with many features that make it easy to transfer money to and from other bank accounts. I have more details in my October Capital One InterestPlus Online Savings Account review.

    One interesting thing to note is that it's the only one of the three which has some connection with the credit card. The use of the credit card allows the saving account customer to receive the bonus interest rate without having to maintain a $10K balance.
  Tags: American Express Bank, FSB., Capital One Direct Banking, Discover Bank, savings account

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Comments
8 comments.
Comment #1 by larkin (anonymous) posted on
larkin
Signed up with Discover last year when they were offering $25 bonuses with their CD accounts.  Opened a savings account earlier this year, taking advantage of another bonus offer.  The savings account was upgraded to Premium and is now receiving 1.50%.  The accounts were extremely easy to open.  Closing the CDs and moving the proceeds into my savings account has been equally easy.  Great customer service and nice rates.  My one minus--their ACH is a bit slower than Ally and Capital One.

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Comment #2 by Wil posted on
Wil
I happen to like Capital One. I have the InterestPlus Savings, and get the quarterly bonus due to my use of the credit card, and the High Yield Money Market. When I need to write I check, I just transfer the amount needed from the Savings to the Money Market, where it still gets a decent rate while the check is in the mail. My first account with Capital One Direct was a CD, which is earning 5.25% APY until Dec. 2015. Overall, I very satisfied with Capital One's products and customer service. On my advice, my Dad opened the Simple Savings account (currently earning 1.20%) at a local Capital One branch (where he already had a IRA CD) earlier this year.

3
Comment #3 by dave9354 posted on
dave9354
Larkin -what is the premium account at 1.50 %?  I only see their savings account paying 1.25%

2
Comment #4 by larkin (anonymous) posted on
larkin
Not really sure why they did it or what triggers it.  Got a notification e-mail right after I opened the account saying that I was being upgraded.  I've see other comments here and elsewhere of other people getting the same bump.

2
Comment #5 by KenBDG posted on
KenBDG
About the Discover Bank premium account, it appears those who had accounts transferred from ETrade Bank and those who opened accounts around that time (early this year) were converted to this premium account. That was the time right before the rate fell from 1.60% to 1.35% APY. The Premium account rate stayed close to 1.60% apy. My guess is that Discover Bank wanted to avoid the appearance of a bait-and-switch for those customers.

3
Comment #6 by adityanm posted on
adityanm
FIA services is a subsidiary of BAC and services cards for Schwab and Fidelity. Only problem with Fidelity cards can rewar up to 3% but you cannot cash out the reward less than $50. Schwab branded card give only 2% but can be cashed in any amount' 

2
Comment #7 by Anonymous posted on
Anonymous
As I've mentioned in other posts, I'm a customer of Cap One and have several different kinds of accounts with them, that fit my needs...

That said, there are some limitations about the Internet Plus account, specifically:

"InterestPlus Online Savings Transaction Limitations
No more than a maximum of six withdrawals in any calendar month are permitted. ATM cards and checks are not available for this account"


Also, as I've mentioned elsewhere, my biggest and chief gripe with Cap One is almost all of their bank accounts have a five business day hold period on incoming deposits from other institutions or sources... meaning, since weekends don't count as business days, it's usually going to be 7 days from the time your funds are credited until Cap One will allow you access to them (their normal five business day waiting period, and what usually will end up being the two weekend days).

From Cap One's account disclosures document for the Interest Plan Online Savings Account:

"For accounts opened and funded older than 30 days, funds deposited into your account will be held for five business days (available to you on the sixth business day) after the day we receive and process the deposit."

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Comment #8 by Anonymous posted on
Anonymous
Re post #6 above, Schwab is no longer sponsoring its VISA credit card as of October 2010, and the responsibility for the cards has been taken over entirely by FIA... For now, the terms and conditions have remained the same, but we'll have to wait and see what FIA does in the future.... So right now, there's no connection between Schwab and FIA Card Services... They've gone their separate ways...

 

1