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The Early Withdrawal Penalty (EWP) for the 12-month Flex Index CD is 90 days interest on the amount withdrawn and 180 days interest on the amount withdrawn for the 24-month and 36-month Flex Index CDs.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.
.....and it wont matter!
https://www.youtube.com/watch?v=vqQmTyOHTsw
5 year jumbo CDs, keep until maturity, ignore the 10 day grace period to withdraw money, and then my Credit Union auto rolls it into a new one, same term. I dont think I have actually touched a CD in 15 years. With spousal W2 income, and a pension coming in, life is simple. No stocks, No bonds, No treasuries, No 401k....but gold is a fun hobbie!
Umm... What? With all due respect, let's parse this out. Just for the benefit of the viewers at home, if for no other reason.
Your assertion that to keep "rolling over" your jumbo 5-year CDs at the same financial institution (FI), with the exact same term, etc., for 15 years, has in fact shown the best financial return... sorry, but that seems a bit odd. And not really believable. Can anyone here name an FI that has been in even the top 3% for 5-year CD rates, over the past 15 years? I can't, because from what I've seen the rate leaders have changed, early and often! (Just like voting in Chicago... but that's a different issue).
Think a moment of the users here 4-7 years ago who held high-rate PenFed CDs. Would they have been smart to auto-renew at PenFed's given renewal rates?
Give me a break! Word to the wise, a wee bit of searching on the web affords riches.
I agree with your assessment that better rates could be had (maybe). My 2-3 financial institutions that I have used since 2005 have been very good to me, but are NEVER rate leaders, BUUUT always very near the top! I am am simple guy, who still has a W2 household income, and pension coming in. I am not wiring my money all over the country to gain a quarter percent more, PAH-LEASE! And i am not getting short term CDs because honestly, I am too lazy to deal with it every year! I have commented on others peoples posts where they are moaning about some weird fine print rule that they didnt realize, because they gave their money to "TooBadForYou Credit Union" or "WeGotchaNow Bank". lol
As I have said before.....
You want good returns, look elsewhere.
You want simplicity and guaranteed returns, look to CDs/Savings
Ladder, and it wont matter!
So on this point I can easily see LSCDs point of view.
Hey, thats my strategy, and Im sticking to it! lol.
I dont do short term CDs, I dont do liquid rates, and definitely dont do bank bonuses. Now, I have opened the Chase Saph Preferred card 3 different times (4 years apart) for the big bonus offer. A couple years ago, they jacked it up to 100,000 points, so that was an easy 1,000 bucks I made just for opening up the dumb card. Used to be 2 years apart, and then Chase got smart. The rest of the leg work just isnt worth it, I wont stray from the 2-3 FIs I use, especially now, where the difference in total household income (interest, w2, pension,) is peanuts.
He owns three expensive homes around the country and he doesn't even know what a CD is. He gets a new car for himself and his wife every couple of years. He and his wife spend every dime. And why not? It's guaranteed income for life.
You would need millions of dollars to generate the income they get from either one of his pensions. And even then it wouldn't be guaranteed. Nothing beats a government pension.
That was a good strategy your friend followed, cant beat 2 pensions!! There is just something about a guaranteed monthly direct deposit hitting your bank account, and never having to look at an "ending balance". The only thing I would have done different, is called it quits after the first 20 years. I can tell you from experience, that having a completely open schedule at age 45, was totally awesome! Much better feeling than waiting for that open schedule until your 65. Thats 20 year difference is extreme, even in good health! I wouldnt change being done at 45 for anything. People need to get on board with the F.I.R.E movement, its a great strategy too.
I'm pretty comfortable where I'm at financially and don't think that lack of money is likely to be an issue in my future. But even so I see the strong difference in the sense of security between having a pension and reliance on investment income. There's nothing like the extraordinary peace of mind a pension offers in your senior years.
The only system that can support government style pensions is one in which the payer of the pension has the authority to take the money to pay for it from other people by force.
Unlike the government sector, the private sector has to EARN its money by producing products and services that people voluntarily choose to buy as it doesn't have the option to take it from them by force like the government does. So the only way what you are suggesting could happen is if the private sector is abolished and absorbed by the government.
The problem with that is that once that happens there will be no private sector wealth to pay for the forced taxes to fund those pensions. The government itself has no wealth, it confiscates every penny it spends from the private sector. No private sector enterprise, no wealth to confiscate to fund the government pensions.
As far left as the country has moved I still don't think the majority of Americans are foolish enough to support that kind of authoritarian communist government.
My pension is private sector, and we never had to pay into it. Still is alive and well today too. Its no modest pension either, its pretty decent. Also had a 401k match. The only catch was that the starting entry level salary was lower than other companies, and your salary throughout your career was a little lower than its competitors. The ones who saw the big picture, stayed with the company long term, and the ones who couldnt see past the present, answered the call of LinkedIn head hunters and went for the instant payday. I can tell you one thing, the company has never even sniffed bankruptcy in the century its been in business, because the workers knew better than to let organized crime unions like the UAW even knock on the door.
California's largest public pensions have significant unfunded liabilities. The largest funds at CalPERS and CalSTRS have reported gaps of more than $138.9 billion and $107.3 billion, respectively, between their estimated obligations to retirees and the current value of their assets.
Many private pensions that still exist are now frozen. You can no longer increase your pension by increased earnings. Most private companies have eliminated pensions. Most private companies now use 401ks and some match part of the contribution. I myself will be getting a private pension in a few years. Also had matched 401k that has grown into a large su..
As far as the comment about private companies producing products that people voluntarily buy. I suggest you try to buy an F16. Most of the individual income taxes go to fund the military industry, whose CEOs give themselves tens of millions of taxpayer money. Any questions?
Not all unions are bad, but I submit the average worker is better off with one than without. Just try to publicly bad mouth the police unions.
P_D and outtempster, oh is this what "Flex Index CD" means? I wasn't aware. Is it the same as "callable"? (Guess I must read much much more!). Too bad as this was going to end my "pilgrimage" to feed my matured CDs! I thought it was - too good too easy too soon to be a normal CD. Not for me as I don't like surprises...especially of the unpleasant persuasion. lol! and :(
One final comment...
The word ”Flex" is not a standardized term like "callable" is. This bank is just using it as a name they gave it for this particular CD. If you see it used on other CDs, it could mean something else other than what it means in this case. It's not a standardized term that has the same meaning in each case that it's used.
I think the best approach to avoid double posts is to assume that as long as you didn't make some mistake you are obviously aware of that your post registered and will eventually show up.