There’s a new online savings account rate leader with a yield back above 5%. Customer Bank increased the rate of its Max Savings account to 5.01% APY. What makes Max Savings different from Customer Bank’s previous rate leader, the High-Yield Digital Savings, is that it’s only available through the MaxMyInterest.com platform (Max). This is the first time that I can recall a bank offering a rate-leading savings account that’s only available through Max. In the past, all online savings accounts available on Max could also be opened directly from the banks. Due to this arrangement, it behooves all of us to understand Max.
Many thanks to DA reader, midas89, for posting this news on Max Savings in this DA Forum thread.
Overview of MaxMyInterest.com (Max)
Max has been around since 2014. The fintech behind Max, Six Trees Capital, LLC, designed Max to help savers keep their cash in the highest-rate savings accounts. It provides some automation for rate chasers to simplify the rate monitoring and fund transferring. According to “How does Max work?” FAQ,
Each month, Max intelligently proposes to you an optimal allocation of your balances to help you earn the best prevailing rates. Then, on your behalf, Max sends to your banks your funds transfer instructions to help you take advantage of higher interest rates.
The funds are transferred between your checking account, which functions like a hub account, and your multiple online savings accounts. The checking account can be your existing checking account. Max also offers the Max Checking account (deposits are held by LendingClub Bank, N.A.) to be used as this hub account. For the online savings accounts, if you already have an online savings account that’s on the Platform, that can be linked. Otherwise, the Platform has an application service, called the Max Common Application, that supposedly makes it easy for you to open the new online savings account and link it to the checking account.
Unlike other fintechs, you can maintain direct control over the bank accounts. You don’t have to go through Max to access your accounts.
Max primarily makes money from fees charged to customers. As described in the FAQ, “How much does Max cost?”,
Membership in Max costs just 0.04% per quarter, or $40 per $100,000 held in your savings accounts, subject to a minimum of $20 every 3 months.
Another important aspect of Max is that you can cancel Max membership at any time. According to the FAQ, “Can I cancel at any time?”,
Yes, you may cancel at any time. Max calculates and bills your membership fee 15 days after the completion of your first optimization and every 3 months thereafter. Upon cancellation, no further fees will be payable, but no credits are given for partial quarters.
Upon cancellation of your Max membership, you retain full access to all of your bank accounts, but Max will no longer propose to you how to optimize your accounts, and you will no longer have access to the Max Dashboard, Intelligent Funds Transfers?, Consolidated Tax Reporting and other features.
In addition to helping savers maximize the interest they earn on savings accounts, Max can also help keep your funds under the FDIC coverage limits by making sure large balances are distributed across online savings accounts from multiple banks.
Overview of Customers Bank Max Savings
A few details of the Customers Bank Max Savings are provided in the Customers Bank’s Consumer Disclosure document. It lists the interest rate as 4.90% with 5.01% APY. The rate can change at any time. Interest is credited and compounded monthly. There is no minimum deposit to open the account, and there is no minimum balance to earn the full APY. Also, there is no monthly maintenance fee.
In addition to the news of the new rate, DA reader midas89 also noted in the DA Forum thread this important ACH transfer limitation for new customers:
Customers Bank forces a probationary period of 30 calendar days for newbies, whereby no ACH transfers can be done when initiated at Customers.
According to a Customers Bank CSR, this 30-day probationary period does apply to the Max Savings account. The CSR also said that once the 30-day period ends, the ACH limit is $250k per day with a monthly limit of $1.5 million. There’s no limit on the number of withdrawals allowed per statement cycle (which banks are permitted to allow based on the 2020 change to the Federal Reserve’s Regulation D.)
DA reader midas89 also noted how Customers Bank credits interest:
Also, please know that Customers credits interest in the middle of the month (I prefer the end of the calendar month). They also do not offer an accrued interest running tally (another thing I prefer).
I understand the concern many readers have in dealing with a fintech for a deposit account. Max appears pretty safe. The fact that you have the account numbers and can manage the accounts directly from the banks is comforting. Regarding the Max service, it’s nice to see that Max clearly states that you can “cancel at any time” and that “upon cancellation of your Max membership, you retain full access to all of your bank accounts.”
It does seem a little odd that Customers Bank is only offering the top rate on the Max Savings account, an account that can only be opened on the Max Platform. This arrangement gives Max some publicity. In a March 2nd blog post on Max’s blog, it celebrated the 5% milestone:
Today marks an exciting day in the history of banking. Today, the highest rate on the MaxMyInterest.com platform has topped 5% for the first time
I’m sure the company behind Max is hoping this publicity will drive more customers to the Max Platform, and those new customers will see the value of paying the fee for the services that Max provides. With higher interest rates, the Max fee isn’t as onerous as it was when online savings account rates were below 1%. Nevertheless, if you maintain your Max membership, the fees will be a drag on your earnings. At a cost of 0.04% per quarter (subject to a minimum of $20 every 3 months), it’ll lower your average overall yield by at least 16 basis points.
How long will the 5.01% APY last? One thing to consider is that savings accounts on the Max platform don’t need a big lead to get the benefits of a rate leader. If a savings account just leads the others by a few basis points, the Max platform should still help move customers’ money to that account. So it seems that the 5.01% APY is overkill for bringing in more deposits from Max customers. So I have doubts that Customers Bank will maintain such a competitive rate for too long. However, with interest rates continuing to rise, it’s possible that they think they can maintain the 5.01% APY for some time.
Availability and Account Opening
Headquartered in Phoenixville, Pennsylvania, Customers Bank is offering the Max Savings Account on a nationwide basis to U.S. citizens and resident aliens with a valid Social Security number.
As mentioned at this Customers Bank savings page, the Max Savings account is “Only available through Max.”
The Max Savings account can be opened as an individual account or as a joint account. According to a Customer Bank CSR, once the account is opened, you can designate one or more beneficiaries using their account form. Customers Bank does not offer trust accounts for online accounts.
Customers Bank has an overall health rating of "A" at DepositAccounts.com, with a Texas Ratio of 1.77% (excellent) based on June 30, 2022 data. In the past year, Customers Bank has increased its non-brokered deposits by $2.96 billion, an excellent annual growth rate of 25.32% APY. Please refer to our financial overview of Customers Bank (FDIC Certificate #34444) for more details.
Customers Bank is currently the third largest bank headquartered in Pennsylvania, with assets in excess of $20.2 billion and more than 1.3 million customer accounts. Founded in 1997 as New Century Bank, the Bank rebranded in 2011 following the acquisition of USA Bank (NY), ISN Bank (NJ), and Berkshire Bank (PA). According to a November 2022 press release,
A pioneer in Banking-as-a-Service and digital banking products, Customers Bank is one of the only banks that provides a blockchain-based 24/7/365 digital payment solution to its customers. In addition to traditional lines such as C&I lending, commercial real estate lending, and multi-family lending, Customers Bank also provides a number of national corporate banking services for Lender Finance, Fund Finance, Financial Institutions, Technology and Venture, and Healthcare clients. Major accolades include:
- #3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence,
- #6 in top-performing banks with assets between $10 billion and 50 billion in 2021 American Banker, and
- #21 out of the 100 largest publicly traded banks in 2022 per Forbes.
How the Max Savings Compares
When compared to nationally available Money Market Accounts and Savings Accounts tracked by DepositAccounts.com, that do not require large balances or direct deposit and do not have small balance caps, the Customers Bank Max Savings APY currently ranks first.
The above information and rates are accurate as of 3/7/2023.