It has been two years since the Wisconsin-based River Valley Bank launched Incredible Bank. The first product was an internet checking account with a very competitive rate. I first reported on it in my November 2009 post when the checking account was paying 2.02% APY. Rates have gone down, but it has remained very competitive over the last two years. In addition, they have expanded their products to include internet CDs and a money market account.
When I first reported on Incredible Bank, I asked "will it stay competitive"? In 2009 we had already seen big rate cuts at checking accounts of other internet banks like Charles Schwab and Salem Five Direct. So there was concern that the rates wouldn't hold up. Below shows how Incredible Bank's rates have held up compared with one of the best all-access credit unions, Alliant Credit Union, and the largest internet bank, ING Direct:
Incredible Bank rate history:
- 10/31/2011 - checking: 1.06% APY, MMA: 1.18% APY
- 10/31/2010 - checking: 1.42% APY
- 10/31/2009 - checking: 2.02% APY
Alliant Credit Union rate history:
- 10/31/2011 - checking: 1.10% APY, savings: 1.15% APY
- 10/31/2010 - checking: 1.35% APY, savings: 1.35% APY
- 10/31/2009 - checking: 1.75% APY, savings: 2.00% APY
ING Direct rate history (for $100K checking tier)
- 10/31/2011 - checking: 1.10% APY, savings: 0.90% APY
- 10/31/2010 - checking: 1.25% APY, savings: 1.10% APY
- 10/31/2009 - checking: 1.55% APY, savings: 1.30% APY
Checking Account Overview
It's important to note that Incredible Bank's checking account is not a reward checking account. There's no debit card requirement to qualify for the high rate. However, there are a couple of similarities to reward checking. First, Incredible Bank does require e-statements. If you don't enable e-statements, you will be charged a $15 monthly fee. This has hit a few readers.
Another similarity to a reward checking account is a balance cap. The portion of the balance over $250,000 receives a lower rate (currently 0.80%). I consider this a large balance cap, so I doubt this is an issue for the majority of savers.
For more details about the checking account and the online banking features, please refer to my original Incredible Bank review.
Money Market and CD Accounts
One thing that has helped to reduce the impact of falling checking account rates is the addition of the money market account and CDs. As is typical with money market accounts, it offers a higher rate than the checking. The downside is that it has a minimum balance requirement of $2,500 to qualify for the top interest rate and to avoid a $10 monthly fee. Like the checking, the rate falls for the portion of the balance over $250,000.
Incredible Bank's internet CDs have often been good short-term deals. Terms currently range from 9 months to 19 months.
Will It Stay Competitive?
For those who don't yet have an Incredible Bank checking or money market account, there is still the question of whether the rates will stay competitive. Two years of history provides some assurance, but history is no guarantee of the future.
Incredible Bank has received nationwide publicity, and if deposits grow too much, the bank may be forced to lower rates. Incredible Bank's parent, River Valley Bank, isn't a large bank. It currently has $805 million in deposits which is less than one percent of ING Direct's $82 billion of deposits.
Two years ago, River Valley Bank had $740 million in deposits. That has grown to $805 million which is a growth of almost 9 percent. It shows that they have been able to avoid being overwhelmed by deposits.
Another potential issue is if it gets acquired by a larger bank. That has often been bad news for the internet accounts. The latest example of this is WTDirect. I don't see any signs that River Valley Bank will be acquired, but it's always a possibility.
River Valley Bank and Incredible Bank Overview
I found this press release that highlights MeridianLink, the company that powers IncredibleBank's account-opening process. In the press release, it provides some history of Incredible Bank:
Incredible Bank quickly made an impact in the online-only banking space. “The first several months we had as many as 500 applicants for new accounts in a month,” says Jaeger. “We quickly grew to have customers in each of the 50 states.”
It also provides some history of River Valley Bank:
Since its beginning in 1967 with one location in Rothschild, WI, River Valley Bank, a family-owned financial services company dedicated to effectively satisfying customers’ needs, has grown to 18 locations in North and Central Wisconsin and Michigan’s Upper Peninsula.
The bank has an overall health score at DepositAccounts.com of 3 stars (out of 5) with a Texas Ratio of 22.38% (average) based on June 2011 data. Please refer to our financial overview of Incredible Bank for more details. The bank has been a FDIC member since 1967 (FDIC Certificate # 19772).