Merchants Bank of Indiana Money Market Account Is Near Rate Leader
Last week, Merchants Bank of Indiana (MBoI) added 77 bps to its nationally available Money Market Account (MMA). The new 3.05% APY applies to all balances and according to CSR, “all existing accounts had their rates updated” as of end of business on September 23, 2022. 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 five months, there have been four rate increases adding a total of 230 bps.
The Truth-in-Savings disclosure for the MMA continues to be part of the online application. The following information is 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.
- Check writing is available, subject to the six per month withdrawal limit.
- If you exceed the standard six transactions per month, there is a $2 fee for each transaction. According to CSR, MBoI has chosen to enforce the six-transaction rule, even though the Federal Reserve paused Reg D.
- ATM/debit card, online bill-pay, and online banking transfers are not available.
MBoI No ACH Zone
About 19 months ago, MBoI stopped offering external ACH transfers, which prompted a fairly lengthy Forum post. CSR confirmed that the “No ACH Zone” is still in effect, with initial funding that can only be done by wire transfer. There is a $15 wire fee, but CSR stated MBoI will reimburse that initial funding wire fee. CSR assured me 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.”
DA reader, ET, described an “Easy and Smooth” 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
Thanks to DA reader, rockies, who first posted on this news in this Forum post.
Flex Index CDs
DA reader, rockies, also made mention of the MBoI Flex Index CDs in a Forum post last week.
This is a variable rate CD tied to the Prime Rate. Different terms may be chosen. The APY still lags leading brokered CD and Treasury rates, but should continue to increase as the Prime Rate increases.
There are three Flex Index CDs, all of which currently earn 3.56% APY and require a $1k minimum opening deposit.
The following is from the disclosure that is part of the Flex Index CD online application.
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.
Interest Compounding and Crediting: Interest will compound daily. Interest will be credited monthly. If the account is closed before interest is credited, you may receive the accrued interest.
Withdrawals of Interest: Interest credited during the term may be withdrawn only on crediting dates.
Renewal Policy: This account will be automatically renewed at maturity. You have a grace period of then (10) calendar days after the maturity date to withdraw the funds without being charged a penalty.
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.
Availability
Headquartered in Carmel, Indiana, Merchants Bank of Indiana has been offering its Money Market Account to all U.S. citizens and resident aliens (18-years or older with a valid Social Security number) for nearly two years.
In a November 2020 blog post, I stated that I was “cautious about labeling accounts ‘nationally available’ when offered by a non-internet bank. As we have seen in the past, banks sometimes change their position on account availability if the demand is too great.” It seems my caution about MBoI was unfounded.
Opening a Money Market Account or a Flex Index CD can be done online, or at any of six full-service Indiana branches located in Carmel (2), Indianapolis, Lynn (2), and Richmond.
CSR stated that 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.
Bank Overview
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 second.
| APY | Account Name | Credit Union/Bank |
|---|---|---|
| 3.25% | Helium Savings Promo ($2.5k min/no max) | Elements Financial |
| 3.05% | Money Market Savings (no min/no max) | Merchants Bank of Indiana |
| 3.00% | Dollar Savings Account (no min/no max) | DollarSavingsDirect |
| 2.75% | Bask Interest Savings Account (no min/no max) | Bask Bank |
| 2.75% | Money Market Account via SaveBetter ($1 min/no max) | mph.bank |
The above information and rates are accurate as of 9/27/2022.
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.
This monetary injury is added by an FI which, insultingly, does not allow you to initiate internal ACH transactions from within your very own account. They are quite strict — even robotic — about this policy; no compassion, mercy or lenience is shown for long-standing customers, nor high balances.
Merchants used to be quite friendly and easy to work with, even reaching out with surprise courtesy calls. (This, before the plug was pulled on initiating ACH transfers; the result of one "rotten apple" fraud spoiling things for the rest of us.) Now I wonder about their future direction. Seems we're all falling on hard times.
Anyway, carefully count up those withdrawals on your hands each month; don't want to lose any fingers!
You are right, some of the MBI's polices seem lacking common sense. Lot of people reported getting their brand new account closed if a trial deposit hit before the WT