Northeast Bank in Maine has launched an internet bank called ableBanking which offers a money market account and CDs. The rates are competitive, but they're not anything to get excited about. The bank is trying to differentiate itself from other internet banks with its charity connection. Here's how they describe this:
We take the money we save and give you better rates with no fees. At the same time, we let you give away our money to your little league, church, neighborhood food pantry or any charity you want to support. We think that together we're able to make savings better.
The bank will give $25 to the charity of your choice when you become a customer. In addition, they will give 0.25% of your average balances every year, for each account on your ableBank anniversary. More details are in the bank's Giving page.
Money Market Account
As I mentioned above, the rates are competitive, but not exceptional. The money market account has a 0.85% APY for all balances as of 7/6/2012. A minimum initial deposit is $1,000, but once it's opened there are no minimum balance requirements.
The money market account offers limited check writing which may be the best way to withdraw money from the account. The bank does have an ACH bank-to-bank transfer service which allows unlimited number of links to your accounts at other banks. The bank's FAQs lists several details about this transfer service, but it didn't mention anything about dollar limits. I used the bank's chat service to ask about this, and I was told there's a $2,500 ACH withdrawal limit per 24 hour period. There's no limit on deposits.
I don't know why the bank has such a small limit on ACH withdrawals. I asked if there were any limitations if the ACH transfer were initiated by the customer from another bank. Here's what I was told:
According to our Deposit Account Agreement, transfers from your Money Market Deposit Account to another Account or to third parties by pre-authorized, automatic or telephone transfer are limited to $2,500.00 per day per person.
As you can see, this is why writing a check may be the best withdrawal option. They also offer wire transfers, but there's a $20 fee for domestic outgoing wire transfers.
The CD terms range from 6 months to 4 years. Minimum deposit is $1,000. Like the money market rate, these rates are competitive, but not exceptional. The following rates are listed in the bank's savings page as of 7/6/2012:
- 0.80% APY 6-month CD
- 1.00% APY 1-year CD
- 1.15% APY 2-year CD
- 1.30% APY 3-year CD
- 1.50% APY 4-year CD
The early withdrawal penalties are:
- 90 days interest on the amount withdrawn for CDs with terms of less than 3 years.
- 180 days of interest on the amount withdrawn for CDs with terms over 3 years.
For more details about the CDs, please refer to the bank's CD's disclosure.
There's an online application that allows funding by ACH transfer from an existing bank account. They use trial deposits to confirm your ownership of the external account. According to the bank's FAQs, your credit report will be accessed. The bank claims that this is "one of the ways we make sure that you are you and we use it ONLY to confirm your identity." There's no mention if this is a hard or soft inquiry.
ableBanking is a division of Northeast Bank, and deposits are held under Northeast Bank. You can see ableBanking mentioned in Northeast Bank's Investors Relations page. The bank has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas ratio of 8.18% (above average) based on March 2012 data. Please refer to our financial overview of Northeast Bank for more details. The bank has been a FDIC member since 1967 (FDIC Certificate # 19690).
How This Internet Bank Compares
My main concern about new internet banks is how easy they make it to open and manage the accounts. New internet banks often have issues that complicate opening and/or managing the account. Based on the information that I received about ACH withdrawals, this new internet bank appears to have this type of issue.
To compensate with this issue, new internet banks have to offer very competitive rates to make the hassles worthwhile. The current rates at ableBanking aren't high enough in my opinion to make it worthwhile. There are several internet banks that offer higher rates.
As for the charity features, you'll have to decide if that gives it an advantage over other internet banks. People may prefer to keep their banking and charity separate.