The Merchants Bank of Indiana (MBoI) Flex Index CDs are variable rate CDs tied to the Prime Rate (Prime Rate minus a margin of 2.75%). Note – the Prime Rate is typically equal to the upper limit of the target federal funds rate plus 300 bps. Following Wednesday’s Fed 25-bp rate hike, the upper limit is now 4.75%, making the Prime Rate 7.75%. Therefore, the Flex Index CD rate is 5.00% with a 5.13% APY.
There are three Flex Index CDs, all of which currently earn 5.13% APY and require a $1k minimum opening deposit.
|5.13%||$1k||-||Merchants Bank of Indiana||12 Month Flex Index CD|
|5.13%||$1k||-||Merchants Bank of Indiana||24 Month Flex Index CD|
|5.13%||$1k||-||Merchants Bank of Indiana||36 Month Flex Index CD|
As stated in the Account Details section on the Certificates of Deposit page.
Determination of Rate: The interest rate of your account is based on an index. Your index is: Prime Rate minus a margin of 2.75%, with a floor of 0%. Your interest rate on your account may change at any time based on changes in the index.
The Early Withdrawal Penalty (EWP) for the 12-month Flex Index CD is 90 days interest on the amount withdrawn and 180 days interest on the amount withdrawn for the 24-month and 36-month Flex Index CDs. An early withdrawal is not necessarily guaranteed:
Early Withdrawal Penalty: If we consent to a request for a withdrawal that is otherwise not permitted, you may have to pay a penalty.
Money Market Account
MBoI also added 26 bps to its Money Market Account (MMA) this week. The current 4.34% APY applies to all balances in all existing and new accounts. While there is no minimum balance requirement to earn the stated APY, a minimum $50 deposit is required to open a new MMA.
Added to MBoI’s product line in early 2019, the MMA’s initial rate was 1.75% APY, which remained in effect until March 2020. Following three rate drops, the APY bottomed out in December 2020 at 0.75%, where it remained until May 2022. (During the 17 months the 0.75% APY was in effect, it was actually a competitive rate: the average online savings account at that time had a range of 0.45% to 0.51% APY.) In the past nine months, there have been seven rate increases adding a total of 359 bps.
The Truth-in-Savings disclosure for the MMA continues to be part of the online application and cannot be accessed without filling out a portion of the application. The following information was provided by CSR.
- Interest compounds daily and credited monthly on the last day of the monthly statement cycle.
- There is no monthly service fee or minimum monthly balance requirement.
- Checking writing is available, subject to the six per month withdrawal limit.
- There is a $2 fee for each transaction beyond the standard six transactions allowed per month. According to CSR, MBoI has chosen to enforce the six-transaction rule, even though the Federal Reserve continues to pause Reg D.
- There are no ATM/debit card, online bill-pay services, or online banking transfers.
MBoI No ACH Zone
In February 2021, MBoI stopped offering external ACH transfers, which prompted a fairly lengthy Forum post. CSR stated that the “No ACH Zone” is still in effect; initial funding can only be done by wire transfer. There is a $15 wire fee, but according to CSR, MBoI will reimburse that initial funding wire fee. CSR stated that subsequent incoming/outgoing ACHs “initiated by an external financial institution will be honored. The only limits on the ACHs are those set by the initiating institution.”
Availability and Account Opening
Headquartered in Carmel, Indiana, Merchants Bank of Indiana has been offering the Flex Index CDs and Money Market Account to all U.S. citizens and resident aliens (18-years or older with a valid Social Security number) for more than two years.
According to CSR, the processing of applications may be slow, as there is only one person who reviews applications. This person will call the applicant to confirm that he/she is a real person and eligible to open an account. Instructions for wiring the opening deposit will then be emailed to the applicant.
DA reader, ET, described an “Easy and Smooth” Money Market Account opening process in a July 2022 Review post.
- No credit check, only ChexSystems for opening a money market account
- $15 incoming wire fee is reimbursed the next business day
- Personal phone call from a CSR to confirm information in online application
- No issue with a joint account initiated online
DA reader, dantheman46, described his experience opening a MMA in the Comments section of September 2022 blog post.
Opened today. They require a wire transfer from another bank as the initial funding source. Once you do this, you can then use another bank to link to this account for ACH transfers in and out.
Flex Index CD Funding and Other Details
The following information is from the Flex CD disclosure and a conversation with CSR.
- Funding – Wire or internal transfer.
- Interest – Compounded daily/credited monthly, with credited interest withdrawn only on crediting dates.
- Maturing Funds – ACH, wire, check, internal transfer.
- Beneficiaries – Up to six, percentages, Social Security numbers not required.
- Grace Period –10 calendar days before automatic renewal.
- Credit Check – ChexSystems and WatchDog.
Merchants Bank of Indiana has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 0.33% based on June 30, 2022 data. MBoI has an excellent capitalization level (11.18%), the result of holding $10.82 billion in assets, with $1.21 billion in equity. Please refer to our financial overview of Merchants Bank of Indiana (FDIC Certificate # 8056) for more details.
Merchants Bank of Indiana was established in 1923 and was originally known as the Greensfork Township State Bank. In January 2009, Symphony Bank (Indianapolis) was acquired, with the Merchants Bank of Indiana rebrand occurring shortly thereafter. MBoI is a subsidiary of Merchants Bancorp, which has $11.1 billion in assets and $8.3 billion in deposits as of June 30, 2022. Other Merchants Bancorp direct and indirect subsidiaries include Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. Currently the third largest bank headquartered in Indiana, Merchants Bank of Indiana has assets in excess of $10.8 billion and nearly 16,000 customer accounts.
How the Money Market Account 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 Merchants Bank of Indiana Money Market Account APY currently ranks fifth.
|APY||Account Name||Credit Union/Bank|
|5.03%||Primis Savings Account (no min/no max)||Primis|
|4.71%||Indexed Savings Account ($2.5k min/$1m max)||Ivy Bank|
|4.47%||Digital Money Market ($2.5k min/no max)||Republic Bank of Chicago|
|4.35%||MySavings Account (no min/no max)||MySavingsDirect|
|4.34%||Money Market Account (up to $1 million)||Merchants Bank of Indiana|
|4.30%||CFG High Yield Money Market ($1k min/no max)||CFG Bank|
|4.30%||Money Market Account ($1k min/$500k max)||Brilliant Bank|
|4.26%||High Rise Savings Account (no min/no max)||Popular Direct|
The above information and rates are accurate as of 2/3/2022.