E*TRADE Bank is again offering an online savings account. It’s called the Premium Savings Account. We began tracking the rate in May 2018 when the rate was 1.50% APY. Like most other online savings accounts, the rate has been rising, and last Friday was the most recent rate hike with the rate increasing 20 bps to 2.10% APY. The rate isn’t exceptional, but it is competitive compared to the large and well-established internet banks.
E*TRADE Bank used to offer a competitive online savings account called the Complete Savings Account. This was introduced in 2006 with a 5.05% APY, which was quite competitive back then. However, the rate didn’t stay competitive. All banks cut rates after the financial crisis, but E*TRADE Bank’s rates fell more than its competitors. In 2009, the Complete Savings Account rate fell to 0.50%, and by 2010, it fell to 0.30%. As a comparison, Ally Bank Online Savings Account yield ranged from 1.50% to 1.09% in 2010.
In February 2010, it was reported that E*TRADE had big mortgage-related losses, and it was trying to reduce its banking business to focus on its main brokerage unit. Soon after that report, E*TRADE Bank informed many of its Complete Savings Account customers that their accounts would be transferred to Discover Bank and converted into the Discover Online Savings Account. The only customer accounts that weren’t transferred were those who had an ongoing brokerage relationship with E*TRADE.
E*TRADE Bank also had a competitive checking account called Max-Rate Checking that like the Complete Savings Account had competitive rates before the financial crisis. Unlike the Complete Savings Accounts, E*TRADE Bank didn’t move Max-Rate Checking accounts to another bank. Max-Rate Checking still exists today, but “max-rate” isn’t a good name for it. The rate for all balances has remained at 0.05% since 2012.
Is E*TRADE Bank Serious About Online Savings Accounts?
Introducing the Premium Savings account this year and keeping the rate competitive is a step in the right direction to prove that E*TRADE Bank is serious about being an internet bank player. However, the rate isn’t high enough to give it a significant advantage over the other well-established internet banks. In addition, the Premium Savings has one important negative: a $10 monthly fee. This can be waived by maintaining an average monthly balance of $1,000 in your Premium Savings Account or by other ways.
E*TRADE Bank’s main intent on its Premium Savings account may not be to attract new customers, but to discourage brokerage customers from moving their cash to other internet banks. If that’s the case, the account may never come close to rate leader status, but it will only remain close to the well-established internet banks.
Summary of Premium Savings Account Features
- Monthly fee of $10. This fee can be avoided by maintaining an average monthly balance of $1,000 in your Premium Savings Account. See this E*TRADE Bank page for other ways to avoid this fee.
- Minimum opening deposit is $1.
- All balance tiers currently earn the same rate (2.10% APY as of 12/31/18)
- Interest is compounded daily. Interest will compound from the date of deposit to the last full day before the date of withdrawal. Interest will be credited to your account on a monthly basis. If you close your account before interest is credited, you will receive the accrued interest through the last full day prior to the account closure.
Bank-to-Bank ACH Transfers
E*TRADE Bank has long had a solid ACH transfer service. It’s the same service that is used by brokerage customers. It’s now called Transfer Money. Some of the details of this service are listed on this E*TRADE page.
Transfers (both incoming and outgoing) are limited to $100k per day. There are no monthly limits except for the standard limit for savings accounts of six withdrawals per month. I was told there is no dollar limit when the ACH transfer is initiated from your other bank.
I was told by a CSR today that there is no limit on the number of linked accounts, but after the first linked account, you have to wait at least 30 days before adding another linked account.
E*TRADE Bank used to have a reputation of fast ACH transfers. A reader informed me that one of his recent outgoing transfers from his E*TRADE account took one business day, and another one took two business days. I was told by the CSR that the delay is generally two to three business days.
For ACH deposits, the E*TRADE Money Transfer page says that funds will be available on the “3rd business day after the day of deposit, if transferred before 4:00 p.m. ET.” The CSR said that holds could last for up to five business days for large deposits.
E*TRADE Bank offers the Premium Savings Account to residents of all states. According to the online application, “To apply online, you must be a U.S. resident with a valid U.S. address and Social Security number. All other applicants should call 1-800-ETRADE-1 (1-800-387-2331).”
I was told by the CSR that there’s no credit pull in the application. They only do a ChexSystem verification. That is consistent with E*TRADE Bank many years ago.
Trust Accounts and POD Beneficiaries
According to the CSR, bank accounts cannot be opened in the name of a trust.
Payable-on-Death (POD) beneficiaries can be designated, but this has to be done once the account has been opened. This cannot be done via the online application. I was told that you can send in a “letter of instruction” to add beneficiaries. Multiple beneficiaries can be added, and social security numbers of the beneficiaries are optional.
With total assets of $48.9 billion, E*TRADE Bank is the 40th largest bank in the U.S. by assets. According to the E*TRADE company overview, “E*TRADE operates a bank with the primary purpose of maximizing the value of deposits generated through its brokerage business.”
The Bank has an overall health grade of "B" at DepositAccounts.com, with a Texas Ratio of 7.06% (excellent) based on September 30, 2018 data. E*TRADE Bank has total deposits of $43.7 billion. However, the large majority of these deposits are brokered deposits ($40.1 billion). Only $3.6 billion are non-brokered deposits. Total non-brokered deposits have dropped considerably from last year, falling from $5.2 billion to $3.6 billion, a drop of 30.5%. Non-brokered deposits are typically seen as preferred over brokered deposits, and thus, this may be part of the reason why E*TRADE Bank introduced a competitive online savings account.
Please refer to our financial overview of E*TRADE Bank (FDIC Certificate # 30746) for more details.
How the Premium Savings Account Compares
When compared to the Savings Accounts tracked by DepositAccounts.com that are available nationwide and with small minimum balance requirements, E*TRADE Bank’s Premium Savings APY currently ranks tenth.
|Interest Rate||Account Name||Credit Union/Bank|
|2.40% APY||MySavings Account (no min)||MySavingsDirect|
|2.39% APY||CIBC Agility Savings (no min)||CIBC USA|
|2.35% APY||High Yield Online Savings ($100 min)||Vio Bank|
|2.10% APY||Premium Savings ($1k min to avoid fees)||E*TRADE Bank|
The above rates are accurate as of 12/31/2018.
To look for the best Savings Account rates, both nationwide and state specific, please refer to our Savings Account Rates Table page.