Bank of Internet USA has been offering some good deposit deals over the last few years. The best deal is its Rewards Checking account which has a 1.25% APY for balances up to $150K if certain monthly requirements are met. This rate has held for almost two years. A reader informed me of a way to get an even higher rate. Bank of Internet USA has several websites targeting affinity groups. Each offers higher rates on its Rewards Checking, 12-month CD and savings account.
The reader mentioned one affinity group website. I did a search and found a few more. Below are four that I found:
- Second Amendment Foundation Banking Center
- Golden Key Banking Center
- American Seniors Association Banking Center
- Anglin' Is Good! Banking Center
Each of these websites offer rates 20 to 35 bps higher than the same products at Bank of Internet USA. Below are examples of the rates as of 4/1/2013:
- Rewards Checking Account: 1.50% APY up to $150K (25 bps higher than standard product)
- Savings Account: 1.00% APY (20 bps higher than standard product)
- 12-month CD: 1.15% APY (35 bps higher than standard product)
I was wondering about the bank’s strategy with these affinity groups. I found the answer in BofI Holding’s 10K (BofI Holding Inc. is the holding company for BofI Federal Bank which is the bank that holds Bank of Internet USA deposits). In the 10K, business strategy was described, and this included details about its distribution channels for its deposit products. Here’s an excerpt:
Our retail distribution channels for our deposit and lending products include:
* Multiple national online banking brands with tailored products targeted to specific consumer segment
* Affinity groups where we gain access to the affinity group's members, and our exclusive relationships with financial advisory firm
So the bank is hoping that these affinity connections will generate more deposit customers. It’s interesting to see they are offering rates that are so much higher than the rates at Bank of Internet USA. Discover Bank has used a similar strategy with groups like the AAA, but its affinity rates have only been 5 bps higher. It will be interesting to see how long these rate spreads will last.
The reader who informed me of the Second Amendment Foundation Banking Center said she had no problem applying for an account. I noticed that the online application URL is the same URL that’s at Bank of Internet USA. I don’t know if any of these applications ask for a membership number of that group. If it does, you can always join the group. For example, anyone can join the American Senior Association for $15 (see the ASA FAQ).
According to the small print, deposits at these affinity group banking centers are FDIC insured through BofI Federal Bank. Here’s what the small print of the ASA Banking Center states:
Bank products and services are offered by BofI Federal Bank. Deposit accounts held at ASA Banking Center are FDIC insured through BofI Federal Bank. All deposit accounts held at BofI Federal Bank are combined and insured under the same FDIC Certificate 35546. Deposit accounts held at ASA Banking Center are not separately insured by the FDIC from other deposit accounts held at BofI Federal Bank. For more information click here.
BofI Federal Bank's financials have remained strong. Currently, it has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 8.93% (above average) based on December 2012 data. Please refer to our financial overview of BofI Federal Bank for more details. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).