Dedicated to Deposits: Deals, Data, and Discussion

Higher Savings, CD and Checking Rates at BofI Federal Bank’s Affinity Groups

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BofI Federal Bank

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:

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).


Related Pages: savings account, CD rates, BofI Federal Bank

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Comments
11 Comments.
Comment #1 by Anonymous posted on
Anonymous
These rates are pathetic!

13
Comment #2 by Anonymous posted on
Anonymous
Hello Ken,

Thanks for your steadfast work!

I looked into the 1.50% rewards checking disclosures and they differ from the BofI 1.25% rewards account requirements.  The former require at least 10 ATM transactions per cycle, whereas the latter requres a minimum of 6 ATM transactions.

4
Comment #3 by Wil posted on
Wil
I have been thinking about joining the American Seniors Association (I would never join AARP, even if I live to be as old as Methuselah), but thought I was a little too young to be a member of a seniors association -- I am aware, by the way, that the ASA doesn't have a minimum age requirement to qualify for membership. But a banking "benefit" may just give me more incentive to consider joining in the near future, rather than continuing to wait.

6
Comment #4 by Anonymous posted on
Anonymous
Which institution honors ASA?

 

1
Comment #5 by Anonymous posted on
Anonymous
Just be aware that some of these organizations promote a political agenda that you might not support.

4
Comment #6 by Anonymous posted on
Anonymous
Mr/Ms Anonymous #1

You can thank Obama and Bernanke's "so-called" policies for these "pathetic" rates.

 

 

9
Comment #7 by Anonymous posted on
Anonymous
Anyone know what fees are paid by BofI for access to member groups any of the or any of the other banks that provide affinity services?

1
Comment #8 by Anonymouse (anonymous) posted on
Anonymouse
All four of those affinity groups take you to the Second Amenedment Foundation's banking center which looks to be one nasty lot of gun totin' climate deniers ready to throw a tea party in John Birch's memory. No thanks, keep the the miserable .25% before I join in with that lot of goons.

1
Comment #9 by verity posted on
verity
I was just on the phone with Bank of Internet, and was informed that all those affinity group rates will go down in September. They will be the same as the regular reward checking rate at 1.25%. Too bad, I was about to go through them and open an account.

3
Comment #10 by Anonymous posted on
Anonymous
I do not see the higher rates shown for the affinity groups.  Are they no longer available?

1
Comment #11 by verity posted on
verity
Exactly. The higher rates are over.

2