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FNBO Direct's Special Offer for Existing Customers and Keeping Accounts Open

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FNBO Direct

FNBO Direct notifed its savings account customers on July 1st of a new savings account promotion. This appears to be a good deal for existing FNBO Direct customers. For those who are not customers, it brings up an important question about keeping old internet bank accounts open. Do these types of promotions provide enough reason to keep open old savings accounts that are no longer competitive?

The FNBO Direct Promotion

First, for those who qualify for the FNBO Direct promotion, is it a good deal? The reader Maecl posted an excerpt of FNBO Direct's email in this discussion forum thread. The email described how existing customers could receive 1.35% APY guaranteed for six months starting this October. Here's an excerpt from that email:

To qualify, make a deposit of $50 in each of the months of July, August and September into your account. Beginning in October, you'll earn 1.35% APY* on the money above what your balance was on close of business June 30, 2011.

Example:

* Your account balance on June 30, 2011 is $1,000.00 and you make a deposit of $50.00 per month for each qualifying month. You are now qualified and will start earning a great rate!
* As a qualified customer, beginning October 3, 2011, you earn the promotional rate of 1.35% APY on balances above your balance on the close of business June 30th, 2011 through March 31st, 2012. The remaining balance will continue earning a competitive 0.85% APY**

Update 7/21/2011: FNBO Direct now says that all deposits including those made after September can qualify for the 1.35% APY during the promotional period. As specified in the email, only the portion of your balance over your June 30, 2011 balance will qualify for this 1.35% APY.

So from the email, it appears that the portion of your balance over your June 30, 2011 balance will earn 1.35% APY for 6 months as long as you deposit at least $50 in July, August and September. However, the email and even the small print of the email left out an important detail. According to my calls and readers calls to FNBO Direct, only deposits made in July, August and September will qualify for the 1.35% APY. Deposits made after September will only receive the non-promotional rate (currently 0.85%). This contradicts the small print of the email which states: "The promotional rate is applied to any deposit balance above the balance in your account at close on June 30th, 2011 (hereinafter referred to as the "Initial Balance") during the promotional period." I would interpret "any deposit balance" to include deposits made during the promotional period. As one reader noted in the forum, this discrepancy doesn't give one confidence in the bank.

If no other issues come up, this promotion can be a good deal. You should be able to make a $50 deposit in July and August, and then one large deposit in September to qualify for the 1.35% APY for 6 months starting in October. You can get close to 1.35% with some current internet bank accounts, but there's no guarantee these rates will last.

Keeping Old Internet Bank Accounts Open?

This brings up the question if it's worthwhile to keep old internet bank accounts opened. A few years ago many internet banks were offering bonuses and high rates. FNBO Direct's 6.00% offer was one of many promotions. These promotions have slowed down, but there have still been recent ones such as WT Direct's deposit bonus.

After the promotions, few internet banks have remained competitive. I can only think of two that have kept their accounts competitive. One is CNB Bank Direct which still offers 1.15% APY (as of 7/13/2011). Back in 2008 they had a promotion which guaranteed 4.00% APY for 6 months. The other one is Clear Sky Accounts which still offers 1.10% APY (as of 7/13/2011). In early 2009 it was offering 3 months of 3.75%.

So when an internet bank no longer becomes competitive, when should one close the account? The first potential issue is fees. Most of these internet banks don't have minimum balance requirements or monthly fees. So you can leave a small balance just for cases like FNBO Direct.

There are two potential gotchas with leaving bank accounts opened with small balances. One is the possibility that the bank adds a monthly fee for small balances. One example of this happened at Amboy Direct in 2009. They added a $5 monthly fee for balances under $100. If a bank already has a monthly fee for small balances, you also have to watch out for the case that the bank raises the required balance. This happened at Everbank in 2009 when it raised the minimum required balance on its money market account from $1,500 to $5,000.

The second potential gotcha is an inactivity fee. Many banks and credit unions will start charging you a monthly fee if there has been no activity in your account for a certain period of time. A year seems to be the most common period of time. The easiest way to avoid this is to set up a regular automatic transfer from one of your active accounts. For example, you can use Ally Bank to debit $1 from your FNBO Direct account every month. You have to make sure that such transfers will be consider as an "activity". I've heard reports that this ACH deposit/withdrawal doesn't always satisfy the active requirement. You also have to make sure that these automatic transfers don't put you over the limit on your maximum number of electronic withdrawals from a savings or money market account (6 per federal regulation).

Besides these potential gotchas, the only other issue that I can think of is having to keep an eye on another account. It's another login and password to remember, and it's another account to regularly check to make sure there are no erroneous debits. The banks' security measures often complicate this when they require new passwords after every few months. Tools like Mint.com can help manage multiple accounts, but there are security concerns with these tools, and even with these tools, passwords still need to be regularly changed.

Keeping old accounts open does take extra work. It might allow you qaulify for a few more deals like in this case with FNBO Direct. However, it might also disqualify you for some deals which are only available for new customers. There's no clear answer about the best strategy.


  Tags: FNBO Direct, savings account

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Comments
23 Comments.
Comment #1 by Anonymous posted on
Anonymous
> and then one large deposit in September

$50 is also good enough for September.

October 3 is when the new 6-month 1.35% APY rate takes effect.





 

3
Comment #2 by Anonymous posted on
Anonymous
Smoke and mirror, if you believe in Santa Claus you may believe in this deal.
They gave themselves exit out of the obligation to pay you any higher rates by stating contradictory rules,which will let them off the hook in October.
If there is is an exclusion clause, it trumps any prior statements.
Will not fall for it at this time, unless they come clean on the rules.

9
Comment #3 by Anonymous posted on
Anonymous
I'm an existing customer with $1 in my account, however I didn't get the E-mail.  How do I know if it will work for me?

3
Comment #4 by Anonymous posted on
Anonymous
I just spoke with a CSR and she was not sure either of which money deposited will count for 1.35% APY, but she said:
“As far as I see it and as I think, only the money deposited in July, August and September will count...”.

I thank her and hung up.

Unless I receive it in writing, I’m not going for this deal.

6
Comment #5 by Anonymous posted on
Anonymous
Incrediblebank checking account is paying 1.21%.  The FNBO promotional rate is 1.35%.  For $100,000 deposit, the difference in interest is only $70 for 6 months.  I don't think it is worth the trouble.

2
Comment #6 by pattyb53 posted on
pattyb53
I finally feel pretty good now about leaving an acct opened with just a small balance. I left $6.56 in FNBO when  their last good interest rate ended. So as of now I did deposit the $50. in July and will do the same in Aug & Sept. But, toward the end of Sept, I plan to make one large deposit. Then as they said, 1.35% interest, on all money deposited in July, Aug & Sept guaranteed until 3/31/2012. This should work out!

3
Comment #7 by lou posted on
lou
I might have greater confidence in them if someone there would acknowledge the email is incorrect. As far as I can tell, no one at FNBO is even aware of the email. Until they clarify what the heck is going on, I don't trust this bank with my money. If something should ever go wrong, I need to know the people at the bank can resolve the problem without great difficulty. Right now, they fail this test.

2
Comment #8 by Anonymous posted on
Anonymous
This is silliness!  Hoops and more hoops to jump through.   Not worth the time and/or the energy to be expended --- at least for me!

6
Comment #9 by Anonymous posted on
Anonymous
 

 

Based on past experience with this bank . . I would not do business with them.  Stated as nicely as I can:

 

They are a pretty kooky outfit.

3
Comment #10 by cumulus posted on
cumulus
 

  
>Anonymous - #5, Wednesday, July 13, 2011 - 2:07 PM writes:

> Incrediblebank checking account is paying 1.21%.  The FNBO promotional
> rate is 1.35%.  For $100,000 deposit, the difference in interest is
> only $70 for 6 months.  I don't think it is worth the trouble.
>
Better yet: buy an Ally 5yr CD (current APY=2.33%), redeem it after
6 months to earn an effective yield = 1.55%.  Less fuss, less muss.

2
Comment #11 by Anonymous posted on
Anonymous
What a sad and bleak state of affairs  when the conservative investor has to rely on this type of nonsense.

2
Comment #12 by Ricochet posted on
Ricochet
*Limited Time Offer: Promotion available to existing FNBO Direct customers (as of June 30, 2011). In order to receive the promotional rate of 1.35% Annual Percentage Yield, you must make and we must receive a minimum of $50.00 in deposits per month in each of the months July, August, and September (all in 2011 and hereinafter referred to as the "Qualifying Months"). The promotional rate is applied to any deposit balance above the balance in your account at close on June 30th, 2011 (hereinafter referred to as the "Initial Balance") during the promotional period. The promotional period begins October 3, 2011 and ends March 31, 2012. For example, if your account balance on June 30, 2011 is $1,000.00 (Initial Balance) and you make the minimum deposit of $50.00 per month for each Qualifying Month, starting October 3, 2011 you will receive the promotional rate on any balances above $1,000 during the promotional period. Your Initial Balance (in this example $1,000) will receive the regular rate, currently 0.85% APY. If you qualify for the promotional rate, anytime your qualifying account falls below the Initial balance you will receive the regular (and not the promotional) rate, currently 0.85% APY. Your statement will not reflect multiple balances with various rates, but rather a blended rate of the entire balance, currently 1.10% APY. Annual Percentage Yields are accurate as of 06/30/2011 and are subject to change after that date. Rates may also change after the account is opened. Fees may reduce earnings. Minimum deposit to open an account is $1.00

Really... By now, Stop making a mountain out of a mole hill.  The 3 months to qualify is plain. The (qualiification period) deposit requirements are plain. The promotional duration is plain. The rate is good!

3
Comment #13 by Anonymous posted on
Anonymous
I don't get the blended 1.10% APY rate. Is that a real rate or just some placeholder rate to show on the statement?

1
Comment #14 by FNBO Direct (anonymous) posted on
FNBO Direct
Hi! This is Teresa with FNBO Direct marketing. I just wanted to let you know as long as you make at least a $50 deposit in July, again in August and again in September; all the new money above your June 30th balance gets the promotion rate through March 2012. So keep your recurring deposit or direct deposits in place and keep saving money! Hope this is helpful! http://bit.ly/pQBxeL

6
Comment #15 by Anonymous posted on
Anonymous
Not sure why FNBO on one hand says it'll pay interest of 1.35% on any sum above the June 30th balance during the 6 month promotional period (Oct.-March), but then far, far below says, "Your statement will not reflect multiple balances with various rates, but rather a blended rate of the entire balance, currently 1.10% APY."  It sounds as if the maximum interest for whatever amount you have above your June 30th balance will add up to only a 1.10% interest rate.

1
Comment #16 by FNBO customer (anonymous) posted on
FNBO customer
How about this now.  After reading the below, it is apparent that the marketing arm at FNBO doesn't really grasp the simple concept of THE WEIGHTED AVERAGE.  With an initial balance of 1,000 in the example earning 0.85%, the ONLY way to "earn 1.10%" on the "blended" full account balance is to deposit another 1,000 in the bank at or around October 3.  If you deposit more or less than $1,000 as of the 10/3/11 date (to qualify for the promotion you only need deposit $150 ), wouldn't the weighted average APY on the entire balance be subsequently more or less than 1.1%? Or does everyone gain 1.10% - hardly a deal when considering ING electric orange pays 1.2% on balances over 50k?  In which case this promo would be extremely misleading to anyone who had deposited more than 1,000, which is what most of us apparently had planned to do, in order to maximize that promotion. I could be mistaken, however.  Unfortunately, the more clarifications we get from FNBO, the less clarity there actually is.

 

* Limited Time Offer: Promotion available to existing FNBO Direct customers (as of June 30, 2011). In order to receive the promotional rate of 1.35% Annual Percentage Yield, you must make and we must receive a minimum of $50.00 in deposits per month in each of the months July, August, and September (all in 2011 and hereinafter referred to as the "Qualifying Months"). The promotional rate is applied to any deposit balance above the balance in your account at close on June 30th, 2011 (hereinafter referred to as the "Initial Balance") during the promotional period. The promotional period begins October 3, 2011 and ends March 31, 2012. For example, if your account balance on June 30, 2011 is $1,000.00 (Initial Balance) and you make the minimum deposit of $50.00 per month for each Qualifying Month, starting October 3, 2011 you will receive the promotional rate on any balances above $1,000 during the promotional period. Your Initial Balance (in this example $1,000) will receive the regular rate, currently 0.85% APY. If you qualify for the promotional rate, anytime your qualifying account falls below the Initial balance you will receive the regular (and not the promotional) rate, currently 0.85% APY. Your statement will not reflect multiple balances with various rates, but rather a blended rate of the entire balance, currently 1.10% APY. Annual Percentage Yields are accurate as of 09/09/2011 and are subject to change after that date. Rates may also change after the account is opened. Fees may reduce earnings. Minimum deposit to open an account is $1.00.

1
Comment #17 by lou posted on
lou
This is one heckuva confusing promotion. The 1.10% blended rate must be assuming equal amounts of money in the acount before and after June 30. I will definitely call them before I deposit any significant money to make sure this is right.  Unfortunately, most of the CSRs have no idea how this promotion works.

2
Comment #18 by Anonymous posted on
Anonymous
Any deposit after Sept 20 will earn 0.85%

1
Comment #20 by Anonymous posted on
Anonymous
I am #18 and not a troll. David A from FNBO sent me an email message telling me this when I asked him what the rate would be for a deposit this week. I jjust called someone else at FNBO and they said we have until 9/30 to get 1.35%, that David A was incorrect.

1
Comment #21 by lou posted on
lou
Hey #18, you need to talk with a supervisor; unfortunately, the c/s agents do not know what they are talking about. It is amusing how no one there understands their own promotion. It sure doesn't inspire confidence in the bank!

2
Comment #22 by Anonymous posted on
Anonymous
Lou,

Tell me about it! (#18) At this point I don't even care- it isn't worth it. But, David A just sent me another email saying Sept 30 was the cutoff. Apparently the 20th was a typo?

1
Comment #23 by Anonymous posted on
Anonymous
Email I received from FNBO Direct:

We are pleased to announce your FNBO Direct Online Savings Account is now earning a promotional rate of 1.35% APY* on balances above your balance on the close of business June 30th, 2011. This promotional rate will run through March 31, 2012. You've qualified for this increased rate with your savvy savings over the last three-consecutive months.

We are committed to helping you reach your financial goals faster and congratulate you on paying yourself first. Setting up a recurring deposits or directly depositing your paycheck into your FNBO Direct account was an important step toward a more secure financial future; we applaud your savings focus and encourage you to keep it going well into the new year!

At FNBO Direct, we strive to set the standard for innovative products and services to help you reach your financial goals faster. You can be confident that your FNBO Direct Accounts are managed by a bank that values trust, integrity and security. Please take advantage of our other banking services such as Popmoney transfers, additional online accounts and more. We thank you for choosing FNBO Direct.

Sincerely,
The FNBO Direct Team

1
Comment #24 by lou posted on
lou
got the same email

1