It has been four 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 competitive over the last four years. In addition, they have expanded their products to include a money market account and internet CDs. The money market account is now the best deal with a 0.91% APY for balances up to $250,000 (as of 11/13/2013).
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, Capital One 360 (formerly ING Direct).
I also included the rate history of CNB Bank Direct. This is an internet bank that's similar to Incredible Bank. CNB Bank Direct was launched in 2008, about a year before Incredible Bank. Unlike Incredible Bank, CNB Bank Direct doesn't offer a checking account. It just has a savings account and CDs. Both internet banks are divisions of community banks that are similar in size. Incredible Bank's parent is River Valley Bank which has $999 million in assets. CNB Bank Direct's parent is The Citizens National Bank of Bluffton which has $667 million in assets. As you can see in the rate history, CNB Bank Direct has become uncompetitive. The current savings account rate is now only 0.21% as of 11/13/2013. The savings account remained competitive in previous years.
Incredible Bank rate history:
- 10/31/2013 - checking: 0.66% APY, MMA: 0.91% APY
- 10/31/2012 - checking: 0.88% APY, MMA: 1.05% APY
- 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:
- 10/31/2013 - checking: 0.65% APY, savings: 0.70% APY
- 10/31/2012 - checking: 0.75% APY, savings: 0.80% APY
- 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
Capital One 360 (formerly ING Direct) rate history (for $100K checking tier)
- 10/31/2013 - checking: 0.85% APY, savings: 0.75% APY
- 10/31/2012 - checking: 0.85% APY, savings: 0.75% APY
- 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
CNB Bank Direct rate history:
- 10/31/2013 - savings: 0.21% APY
- 10/31/2012 - savings: 0.51% APY
- 10/31/2011 - savings: 1.05% APY
- 10/31/2010 - savings: 1.25% APY
- 10/31/2009 - savings: 1.70% APY
- 10/31/2008 - savings: 4.00% APY
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. Four years of history provides some assurance, but history is no guarantee of the future as you can see with CNB Bank Direct.
The risk is that you never know when management loses their motivation on keeping the internet account competitive. Another thing that can ruin an internet account is when the internet bank's parent is acquired by another bank. New management is often not interested in keeping the internet account competitive. We have seen this with acquisitions by M&T Bank and Peoples United. I don't see any signs that River Valley Bank will be acquired, but it's always a possibility in the future.
In 2011 Incredible Bank received nationwide publicity when it was mentioned on CNN.com. I had some concern that it would attract too many deposits which could force the bank to lower rates. It appears that did not happen. Over the last year deposits have increased from $840 million to $867 million. That's about a 3% increase. In 2009, River Valley Bank had $740 million in deposits. So in four years, deposits have grown by about 17%. That's not a big increase when you consider Incredible Bank has been offering competitive rates nationwide for four years. This shows that brick-and-mortar branches still pull in the bulk of deposits for most banks.
In addition to lower rates, you also have to watch out for banks adding new fees. This did happen to Incredible Bank over the last year. It added a monthly fee on its checking account. However, it’s easy to avoid. You either have to maintain a checking balance of $300 or a total balance on all Incredible Bank accounts of $5,000.
Online Banking System
One downside with many small banks is an online banking system that is hard to use. They typically rely on outside vendors to manage the online banking system. These systems are rarely as easy to use as the online banking systems of the big boys, like Ally, Capital One 360 and Discover. I’ve seen several complaints on Incredible Bank’s online banking system in our Incredible Bank reviews section.
Incredible Bank Money Market Account Overview
The money market account pays 0.91% APY for balances of up to $250,000 (as of 11/13/2013). There's a $10 monthly fee if the balance falls below $2,500. One downside is that checks are not offered. Another downside with Incredible Bank is a small limit on its ACH bank-to-bank transfer service. The bank only allows a maximum of $10,000 ACH transferred out per day and a maximum of $50,000 ACH in per day. If you plan on maintaining a large balance in these accounts, you should use another internet bank, like Ally, to push and pull funds into and out of your Incredible Bank accounts. I have more details on the account features in my Incredible Bank account review
River Valley Bank and Incredible Bank Overview
In 2011 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 grade at DepositAccounts.com of B+ with a Texas Ratio of 18.22% (average) based on June 2013 data. Please refer to our financial overview of Incredible Bank's parent for more details. The bank has been a FDIC member since 1967 (FDIC Certificate # 19772).