Last week, Popular Direct increased the rate of its Select Savings Account by 15 bps to 5.40% APY. This is currently the highest rate in the country for a nationally-available online savings account. The Popular Direct Select Savings has a $100 minimum opening deposit, but the 5.40% APY applies to all balances. Thanks to DA reader, ichaelm, for posting on this rate increase in the DA Forum.
It’s nice to see an online bank willing to offer a top rate, but it should be noted that Popular Direct has a history of creating new savings accounts to attract new customers and new deposits. This rate increase did not involve a new account. It applies to the Popular Direct Select Savings account, which was introduced in August with a 5.15% APY.
It’s disappointing to see Popular Direct’s history of creating new accounts. In general, this tactic is a way that banks can save on interest they pay. Only new customers or existing customers who notice and take action will receive the higher rate. Existing customers who don’t take action will remain in the existing account earning less interest. Since these old accounts and their rates aren’t publicly disclosed, DA can’t track them.
This “create-a-new-account” tactic has been used by Popular Direct for quite a while. I wrote about it in 2019, and at that time, Popular Direct was on its fifth savings account since it began operations in 2016. I’ve lost track of the number of savings accounts since 2019, but just this year, there have been three Popular Direct savings accounts.
On the plus side, Popular Direct has made it easy for existing customers to receive the higher rate. Existing customers no longer have to open a new account as if they were a new customer. I was told today by a CSR that existing customers just need to log in and send customer service a request to upgrade their accounts. The CSR was specific in what needs to be in the secure message. First, the message should include “I have read and agreed to the terms and conditions of the Select Savings.” Second, the message should include the instructions to change the account: “Please change my account to the Select Savings Account.” If you went through this account change, please leave a comment about how it went.
Popular Direct Customer Service & Online Documentation
As an online division of Popular Bank, all customer service support for Popular Direct online accounts can be done by either secure message (sent when customers are logged into their Popular Direct accounts) or by phone call (1-800-274-5696). Call support is available Monday through Friday (7:30am to 12:00am EST) and Saturday through Sunday (9:00am through 6:00pm EST).
I called Popular Direct customer service late this morning, and I was connected to a knowledgeable CSR within about four minutes.
The online documentation is more thorough than what many other online banks provide. There’s a long list of FAQs on the Customer Service page. There’s also the Savings account disclosures page which includes links to the following two important documents:
- Product Guide for Popular Direct Select Savings Account
- Personal Banking Disclosure Agreement for Popular Direct Products
Most of the details for the savings account are in the Product Guide, but the Personal Banking Disclosure Agreement include topics such as account ownership types, transaction restrictions and account access capabilities.
Popular Direct Select Savings Account Details
It’s a standard no-minimum online savings account with no monthly service fees. The only minimum is the $100 minimum initial deposit. No debit/ATM cards and no paper checks are available. All fund access is done by electronically transferring funds (either between internal accounts or between external accounts, via ACH). Remote check deposits can also be done using Popular Direct’s mobile app.
Popular Direct continues to enforce the standard six-per-month withdrawal limit even though the Federal Reserve no longer requires banks to enforce this limit on savings accounts. According to the Personal Banking Disclosure Agreement, they may close your savings account if you exceed these limits.
ACH Transfer Capabilities
On a positive note, Popular Direct provides many ACH details on its website. Unfortunately, there are significant limitations. For ACH transfers, you may link only one external account at a time to your Popular Direct account, and there are restrictions on when you can change the link. Below is an excerpt from the small print of the Product Guide:
An “External Account” is an existing deposit account that you own at another US financial institution and you have successfully validated through the External Account function in Popular Direct Online Banking. You cannot change your External Account during the first 60 calendar days after opening your Popular Direct account. Thereafter, you may change your External Account. However, each time you change your External Account, you may not change it for 60 calendar days.
According to an FAQ, “You may change your linked external account by contacting our Customer Care Center via phone call or secure message.”
Another important limitation is the use of ACH transfers originating from your other banks. The following except is also from the Product Guide:
ACH debits that originate from external accounts other than your External Account will not be permitted during the first 70 calendar days after opening your Popular Direct account. During such 70-day period you will only be permitted to complete online transfers from your External Account or from your other Popular accounts.
In the “External accounts” section of the FAQs, the ACH transfer limits to/from your external account are listed in a table. The dollar limits and the transaction number limits are as follows:
Maximum credits or debits per business day is $999,999 (cumulative) with a maximum number of 6 transactions.
Maximum credits per calendar month is $119,999,880 (cumulative) with a maximum number of 120 transactions.
Maximum debits per calendar month is $5,999,999 (cumulative) with a maximum number of 6 transactions.
Availability and Account Opening
As an online division of Popular Bank, Popular Direct accounts can only be opened online at the Popular Direct website.
Popular Direct accounts are available to citizens and permanent residents of the U.S. who are 18 or older. Only individual and joint accounts can be opened. Custodial accounts and business accounts are not available. Also, accounts cannot be opened in the name of a Trust.
In the account application process, you’ll have to provide the routing and account number of an external bank account that’ll be used to fund the Popular Direct account. Once the application is submitted, it may take between 2-4 business days for the small transactions to enter your external account. After that, you need to verify the amounts that were deposited and then your account will be opened.
Account Opening Details
- Ownership – Individual or joint only
- Interest – Compounded daily/credited monthly
- Beneficiaries – Up to three individuals or one trust with equal shares “unless otherwise stated in a letter of instruction;” Social Security numbers required for all beneficiaries.
- Credit Check – Soft pull by Experian, ChexSystems
Ownership, interest and beneficiary details are listed in the Personal Banking Disclosure Agreement. There are also several FAQs related to beneficiaries and payable on death (POD) accounts. The information on credit checks is from my conversation with a CSR. The CSR also warned that if you have a security freeze on your Experian credit report, you’ll have to first unfreeze it to avoid having your account application rejected.
Popular Direct is an online division of Popular Bank, an FDIC member institution and a New York state chartered bank. Popular Direct and Popular Bank deposits are combined for purposes of determining FDIC coverage eligibility.
Popular Direct/Popular Bank has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 1.54% (excellent) based on June 30, 2023 data. In the past year, the Bank has increased its total non-brokered deposits by $1.6 billion, an excellent annual growth rate of 20.75%. Please refer to our financial overview of Popular Direct/Popular Bank (FDIC Certificate # 34967) for more details.
Established in 1999, Popular Bank was originally known as Banco Popular North America (BPNA). In the first six years of operation, BPNA acquired 13 banks located in California (3), Florida (2), Illinois (5), New Jersey, Puerto Rico, and Texas. BPNA was also the holding institution for the now defunct E-LOAN; in May 2017, all E-LOAN deposit products became Popular Direct products.
The Popular Bank rebrand occurred in 2018 and according to a Sun Sentinel 2018 article,
The name change is largely about conveying to the public a perception of a larger, more expansive bank with a broader base of services ranging from condo loans and single-family residential mortgages to private banking.
"When I started, we were Banco Popular and changed to Popular Community Bank," Velasco said in a telephone interview. "At that point it was the right thing for us to change. One of the challenges we had was that in the States, a lot of people perceived us as being a bank just for Hispanics or a bank for foreigners.
Popular Bank is currently the eleventh largest bank headquartered in New York, with assets in excess of $12.1 billion and more than 166,000 customer accounts.
How the Popular Direct Select Savings Account Compares
When compared to the 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 Popular Direct Select Savings APY currently ranks first.
The above information and rates are accurate as of 10/17/2023.