Today, Live Oak Bank increased its Savings Account rate to 1.40% APY. This is currently the highest rate on a nationally available savings account. Live Oak Bank now shares this top spot with DollarSavingsDirect, which had been alone as the rate leader since July 13. This might not last long. DollarSavingsDirect advertises itself as “America’s highest rate,” and it has already increased its rate twice this year when a challenger matched its rate. Live Oak Bank’s rate hike is small (5 bps), but this type of competition should help keep moving the savings account rates higher. We probably won’t see any larger increases until we see more Fed rate hikes.
Less than two months ago, Live Oak Bank unveiled a new Savings Account, which then earned 1.25% APY on all balances. On July 6th, Live Oak Bank raised that rate to 1.35% APY, and just over a month later, the rate is now 1.40% APY.
Live Oak Bank’s Savings Account has no minimum opening deposit requirement and no minimum balance requirement to earn the stated APY. The Deposit Services Representative (DSR) stated the balance cap is $5m.
In the comments of last month’s post, a few readers reported on some issues with this account. One reader said he was required to send in copies of his driver’s license and social security card. I called Live Oak Bank again today, and the DSR said if you correctly answer the online ID verification questions, they won’t request copies of your IDs.
Another concern was the speed of the ACH transfers, which does seem to be an issue. Live Oak Bank’s FAQs state the following:
Deposits made by ACH transfer which are initiated through the Live Oak Bank portal are available after five business days. We use a third party processor to retrieve the funds from your financial institution. The deposit will post on the 4th business day and start earning interest at that time. For security and verification purposes, funds are held for two business days once posted to your Live Oak account.
ACH transfers initiated from an external account and sent to your Live Oak account are available immediately upon receipt.
As you can see, you’ll lose at least four days of interest for incoming transfers initiated through Live Oak Bank. To avoid this, it’ll be better to initiate transfers from another bank.
Outbound transfers are faster. According to the FAQs, “Your ACH should post to your external account within 2-3 business days.” At least they don’t have small limits on the dollar amount that can be transferred. Using their system, “you can move up to $250,000 per transfer. This applies to both internal and external transfers.” Based on my conversation with the DSR from last month, up to three external accounts can be linked for ACH transfers. You can remove any linked accounts and replace them with different accounts, as long as the total number does not exceed three.
Headquartered in Wilmington, North Carolina, Live Oak Bank is an internet bank with no brick-and-mortar branches, other than the Bank’s Headquarters located on Tiburon Drive.
As stated in the FAQs, to apply for an account “individuals must be a United States citizen or Permanent Resident with a valid Social Security Number.”
There is no direct link to Live Oak Bank’s online application for new customers. The first step in establishing a new account is clicking the “Get Started” button on the Live Oak Bank savings account page. This takes you to a simple form that requests your name and email address. According to DSR, this is the first step toward initiating the online application process.
Live Oak Bank has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 0.90% (excellent), based on March 31, 2017 data. In the past year, the Bank has increased its total non-brokered deposits by $371.71 million, excellent annual growth rate of 43.86%. Please refer to our financial overview of Live Oak Bank (FDIC Certificate # 58665) for more details.
A young but quickly growing institution, Live Oak Bank was founded in 2008 and currently has $1.86 billion in assets. Live Oak Bank describes itself this way:
Since 2008, Live Oak Bank has been achieving its primary goal: financing small business growth nationwide. Today, Live Oak Bank is one of the top originators of small business loans, with one of the strongest loan portfolios in the country. Since we lend exclusively to small businesses, our focused lending experience is second to none.
Chip Mahan, CEO and key founder of Live Oak, was named by FutureBanker magazine as one of the "10 Most Influential People in Financial Services," and was also recently featured as an "industry innovator" in American Banker.
How the Savings Account Compares
When compared to the 207 Savings Acccounts tracked by DepositAccounts.com that are available nationwide, Live Oak Bank’s Savings Account APY currently claims the top spot, tied with DollarSavingsDirect. Note, there are money market accounts with higher rates, but these either have a high minimum balance requirement ($100k) or a low balance cap ($35k).
|Interest Rate||Account Name||Credit Union/Bank|
|1.40% APY||Savings Account||Live Oak Bank|
|1.40% APY||Dollar Savings Account||DollarSavingsDirect|
The above rates are accurate as of 8/8/2017.