Just a few months ago, I wrote about a new internet bank, Northern Bank Direct, (NBD) which is the internet division of Massachusetts-based Northern Bank. The initial offerings by NBD included a competitive Money Market Account (MMA) and several equally competitive CDs. Since the beginning of June, internet banks are where the action is, as far as liquid accounts (MMA, savings, etc.) are concerned. These internet bank rate increases have been so frequent, I’ve written more than 25 blog posts in two months. Over the weekend, NBD joined the rising rate club by hiking its MMA rate to 1.26% APY on all balances up to $250k.
|1.26*%||-||$250k||Northern Bank Direct||Money Market Account|
|OTHER TIERS: 0.01% → $1mm+ | 0.75% → $250k - $1mm|
Balances above $250k have two tiered rates: the balance portion between $250k and $1 million earns 0.75% APY, with the portion of the balance over $1 million earning 0.01%. This results in a blended APY, which is not always the case with tiered rates. For example, CIT Bank’s Premier High Yield Savings has a higher rate (1.30% APY, up to $100k), but if the balance exceeds $100k, the entire balance will earn the lower rate of 1.25% APY.
The MMA can be opened with a minimum deposit of $25 and there is no monthly service charge. When compared to a savings account, an advantage of the MMA is its limited fee-free check writing, with a maximum of six checks per month. (NBD also offers complimentary standard checks.) While there is no monthly service charge, there is an excessive transaction fee of $20 for each withdrawal over the permitted six per statement cycle. As a member of the SUM ATM network, NBD account owners have access to thousands of surcharge-free ATMs throughout the country.
My April blog post about Northern Bank Direct contains details about the ins-and-outs of the MMA, including information that is not available on NBD’s website.Northern Bank Direct CDs
NBD’s initial offering included five CDs, with the 24- and 36-month CDs being the most competitive at the time. In the past three months, there have been three rate increases, one rate drop, and one “no change” for the five CDs, with the 24-month CD now the most competitive. The minimum opening deposit is $500, with no stated balance cap.
According to CSR, the Early Withdrawal Penalty for CDs with terms of 12 to 35 months is a substantial 12 months interest. CSR also stated that partial principal withdrawals are not allowed; any withdrawal of the principal will result in the CD being closed. On the other hand, interest can be paid out at any time by check or ACH, or through a transfer to a Northern Bank Direct MMA. Transferring any interest to an MMA is probably the easiest withdrawal route, but there is a monthly $4 dormant account fee for MMAs with account balances of less than $500 for 12 consecutive months. The $4 fee starts in the thirteenth month.
The April blog post also contains more details about NBD’s CDs.
As the internet division of Massachusetts' Northern Bank, Northern Bank Direct offers it services and product line nationwide online only.
Opening a Money Market Account must be done using NBD’s online application. In addition to the usual personal information, the account number, routing number, and name of the financial institution being used to transfer funds for the initial deposit are required.
As the online division of Massachusetts-based Northern Bank, Northern Bank Direct operates under the Bank’s FDIC Certificate (# 18266) and shares its financial history.
Northern Bank/Northern Bank Direct has an overall health grade of “A” at DepositAccounts.com, with a Texas Ratio of 9.42% (excellent), based on March 31, 2017 data. In the past year, the Bank has increased its total non-brokered deposits by $90.98 million, an excellent annual growth rate of 9.68%. Please refer to our financial overview of Northern Bank/Northern Bank Direct (FDIC Certificate # 18266) for more details.
While Northern Bank Direct is new, Northern Bank is not. Established in 1960 by brothers Jim and Thomas Mawn, it's the largest privately-held, family-run, full-service bank in Massachusetts. In 58 years, Northern Bank has grown to become 24th largest bank in the state with assets in excess of $1.8 billion and nearly 28,000 customer accounts.
How the Money Market Special 3 Compares
When compared to the 172 Money Market Accounts tracked by DepositAccounts.com that require a similar minimum balance and are nationally available, Northern Bank Direct's Money Market APY currently ranks third.
How the CD Compares
When compared to the 192 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Northern Bank Direct's 24-month CD APY currently ranks third.
The above rates are accurate as of 7/31/2017.