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ON BY Ken Tumin
According to this CNN article, Citigroup's new high-yield online savings account called e-Savings account has raised $3 billion in deposits for the first two months. The high yield on this savings account (currently 4.75%) may be good for customers, but investors are worried that it'll eat into profits. $1 billion of the $3 billion in deposits were from current Citibank customers. An analyst estimated that these new deposits cost the company $40 million.
Citigroup CEO, however, seems to be willing to look beyond these costs to the goal of being a leader in online banking. He states that "It will become the dominant way of doing banking and with our better nationwide brand... we have the ability to go for it in ways others don't have."
A familar name and with local branches, Citibank's e-Savings account will be hard to beat. This should force smaller banks like EmigrantDirect to be competitive. Although no one seems to be in any hurry to reach 5% on savings accounts.
One issue with big banks like Citibank will always be customer service. They don't always follow through on their deals. The $200 Citibank checking account and credit card deal may be one. Several have reported having trouble in this deal.
Citigroup CEO, however, seems to be willing to look beyond these costs to the goal of being a leader in online banking. He states that "It will become the dominant way of doing banking and with our better nationwide brand... we have the ability to go for it in ways others don't have."
A familar name and with local branches, Citibank's e-Savings account will be hard to beat. This should force smaller banks like EmigrantDirect to be competitive. Although no one seems to be in any hurry to reach 5% on savings accounts.
One issue with big banks like Citibank will always be customer service. They don't always follow through on their deals. The $200 Citibank checking account and credit card deal may be one. Several have reported having trouble in this deal.