BrandBank has started a checking account promotion which is guaranteeing a 1.07% APY through June 30, 2013. A minimum balance of $50,000 is required. The rates are much lower for smaller balances (0.25% for $10K to $50K and 0.10% for under $10K). There's also another requirement. One of the following criteria must be met within 60 days of account opening: 1) sign up for recurring Direct Deposit on this account; 2) enroll in Brand Bill Pay; or 3) open a CD with at least $25,000 in new money not currently on deposit with BrandBank. If this requirement isn't met, the account will be converted to another checking account with a lower rate. It appears the Bill Pay option would be easiest one. I was told Bill Pay is free, and there's no fee that will be charged if it's not used.
The bank has set up the special webpage at BrandBank107.com that has more details and a link to an online application powered by Andera. The application requires new customers to enter their zip codes to ensure customers reside in the bank's market area. The Greater Atlanta area is the bank's primary area, but they also accept customers who live in parts of states where they have mortgage offices. States include Georgia, Florida, Mississippi, Alabama, South Carolina, North Carolina, Virginia, Maryland, Tennessee and Kentucky.
In the application, links to disclosure documents are provided. Here are the Truth in Savings disclosure and the schedule of fees.
BrandBank isn't in the best financial shape. As with any bank, it's best to keep deposits under the FDIC coverage limits. The bank is still operating under a written agreement with the Federal Reserve. It first took effect in August 2010.
The bank has an overall health score at DepositAccounts.com of 2 stars (out of 5) with a Texas ratio of 113.58% (poor) based on June 2012 data. Please refer to our financial overview of BrandBank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 878).
How This Checking Account Promotion Compares
A promotion with a top rate that's guaranteed for a certain period of time is rare. The only one that's nationally available is at EverBank which continues to offer 1.25% APY for the first 6 months on its checking and money market accounts. The downside with EverBank's offer is that the balance that qualifies for this rate is limited to $100K in the checking and $50K in the money market account.
The problem with any of these rate guarantees is that the rate should be expected to fall when the promotion period ends. The post-promo rates are often uncompetitive. For EverBank, at least they clearly document the ongoing rate (currently 0.76%).
Another option is to go with a top rate without a rate guarantee. You can sometimes get lucky when the bank waits a long time before cutting rates. Those who opened TIAA Direct savings and money market accounts early this year have been fortunate with a yield of 1.25% that still hasn't fallen. TIAA Direct isn't open to new customers, but there are several other internet banks offering yields over 1.00%. Salem Five Direct currently has the highest rate with a savings account promo that pays 1.25% APY on balances up to $500K.
Finally, a high-yield reward checking is another option to consider. This requires more work to maintain the monthly requirements, and most accounts have balance caps that range from $5K to $25K. One internet bank that has a reward checking account without a balance cap is Bank of Internet USA. The top yield on this account has been 1.25% APY since it was launched in July 2011.
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