Merchants Bank of Indiana Flex CD and Money Market Rates Leap Up

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%). N.B. – the Prime Rate is typically equal to the upper limit of the target federal funds rate plus 300 bps. Following this week’s Fed 25-bp rate hike, the upper limit is now 5.50%, making the Prime Rate 8.50%. Therefore, the MBoI Flex Index CD rate is 5.75% with a 5.92% APY. This yield compares quite favorably to the current yields of brokered CDs and Treasury bills/notes.

There are three Flex Index CDs, all of which currently earn 5.92% APY and require a $1k minimum opening deposit.

As stated in the Account Details section on the Certificates of Deposit page.

Interest rate is based on a Prime Rate index minus a margin of 2.75%, with a floor of 0%. Interest rate 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The Early Withdrawal Penalty (EWP) for the 12-month Flex Index CD is 90 days interest on the amount withdrawn and 180 days interest on the amount withdrawn for the 24-month and 36-month Flex Index CDs.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 EWP 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

As DA reader, 51hh, noted in a recent Forum post, ”It is about time [for the MBoI Money Market Account] to join the 5% club, better late than never.” Following the Fed rate hike, the Money Market Account (MMA) APY added 25 bps. The new 5.00% 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 that 17-month time frame, 0.75% APY 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 14 months, the MMA has seen ten rate increases, adding a total of 425 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 comes from a conversation with 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.

Brief History of the MBoI No ACH Zone

It’s been more than two years since MBoI stopped offering external ACH transfers, which prompted a fairly lengthy Forum post. CSR stated 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. (Several DA readers have confirmed in Forum posts that their initial wire fee was reimbursed.) 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.

Opening a Flex Index CD or Money Market Account can be done online, or at any of six full-service Indiana branches located in Carmel (2), Indianapolis, Lynn (2), and Richmond.

According to CSR, there is only one person who reviews applications, so processing of applications may be slower than expected. 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

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.
• Ownership – Individual or joint.
• 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.

Bank Overview

Merchants Bank of Indiana has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 4.30% based on March 31, 2023 data. In the past year, MBoI has increased its total non-brokered deposits by $503.87 million, an excellent annual growth rate of 7.27%. Please refer to our financial overview of Merchants Bank of Indiana (FDIC Certificate # 8056) for more details.

Established in 1923, Merchants Bank of Indiana 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 $14.2 billion in assets and $11.3 billion in deposits as of March 31, 2023. 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 $13.9 billion and more than 23,000 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 current Merchants Bank of Indiana Money Market Account 5.00% APY is respectable, if not competitive. As of this writing, there are 13 banks listed in DA’s rates tables that offer MMA and Savings Account rates higher than MBoI Money Market Account APY. The following is a sampling of those MMAs and Savings Accounts.

The above information and rates are accurate as of 7/28/2023.

To look for the best rates on liquid bank accounts, both nationwide and state specific, please refer to our Money Market Accounts Table and Savings Accounts Table.