Changes in ShoreBank Direct's Savings Account


Update 1/14/10: Rates have fallen. New rates are 1.09% APY for under $100K and 1.25% APY for $100K+. Note how close these are to the FDIC rate caps.

ShoreBank Direct recently sent letters to its customers informing them of a new tiered rate structure for the online savings account. Here's an excerpt of the letter:
In order to provide ongoing flexibility in the ShoreBank Direct Online Savings Account, we will begin offering a tiered interest rate. Separate rates will apply to accounts with a balance under $100,000.00 and accounts with a balance of $100,000.00 or more. At this time, the rate for both tiers will remain 1.70% APY* (1.68% Interest Rate).

Credit goes to FW member xavierjay for posting this letter.

ShoreBank Direct's website is already showing the two tiers. Both are still at 1.70% APY, but I doubt this will last long. I hope we don't see an uncompetitive rate below $100K. I've seen many cases in the past when banks will add tiers, slash the low-tier rate and then continue to advertise a decent rate for the top tier.

ShoreBank Direct had long been offering top rates on its internet savings account. The rate had remained above 2% for much of 2009. The online account also has some decent features such as allowing you to link up to 6 external accounts for ACH transfers (see account review).

One question is whether ShoreBank is subject to the FDIC's new rate caps. The FDIC rate caps for money market accounts have a higher rate for a Jumbo account ($100K minimum balance).

I don't know if ShoreBank is officially considered less than well capitalized. Only those banks are subject to these rate caps. However, ShoreBank's financial problems have been well publicized. Reuters just reported that the Fed has ordered ShoreBank to suspend dividends. In July 2009 the FDIC issued a cease and desist order. As you might expect, their ratings at both BauerFinancial and are at the lowest levels.

I hope they can overcome these problems. Not only have they offered a competitive online savings account, but the company has tried to be a different kind of bank. As described in ShoreBank's corporate info page "ShoreBank Corporation is America's first community development and environmental bank holding company."

Other Competitive Savings Accounts

I recently updated a short list of top savings accounts from 4 strong institutions. For other savings accounts, refer to the money market account and savings account sections of for other competitive options that are available locally and nationwide. I also have top accounts listed in my hot deals and nationwide savings account sections of my weekly summary.

If you want rates higher than 2% from a liquid account, your only option is a reward checking account. Unlike savings accounts, it'll require some work. To find reward checking accounts in other areas of the nation, please refer to the reward checking section of To learn more about reward checking, please refer to this reward checking overview.
Anonymous   |     |   Comment #1
I wish I had known the information about ShoreBank's being a "different kind of bank." I would have become a customer even though I don't reside in their market areas. Let's just hope this is not an example of good guys finishing last. But don't expect the government to care about such things.
Sandra (anonymous)   |     |   Comment #2
New rates posted on website
1.25% over $100000.
1.09% under $100000.
Bob (anonymous)   |     |   Comment #3
Sometimes in June last year FDIC sent memorandum to all FDIC insured banks to stay within posted guidelines _ or 0.50%, so it is expected most banks to comply to that.
Review of ShoreBank's New Direct High Yield Savings Account

Update 8/30/10: ShoreBank was closed by regulators. However, a new bank, Urban Partnership Bank, assumed all deposits and is continuing the Shore Direct savings account. In addition, the rates have gone up: 1.25% APY $100K+ and 1.20% APY for under $100K. Refer to the bottom of the post for the rate history.

ShoreBank has a new Direct High-Yield Savings Account with a yield of 5.00% APY. It looks like the typical online savings account. Only $1 is needed to open the account and earn the top yield. The 5% APY yield...

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ShoreBank Direct Online Savings Account Rate Increased to 2.15%
ShoreBank Direct has just done something that has been rare this year for banks. It increased the rate of its online savings account. The rate increased from 2.05% to 2.15% APY. There have been a few other rate increases this year at other banks, but in many cases the rates had been uncompetitive before the rate increase.

Refer to my account review for details of this savings account. I also have a rate history at the bottom of that post. Since 2007, they've maintained very competitive rates.

Unfortunately, the rate increase may...

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