Update 03/20/09: OnBank's savings account yield had fallen to 0.75% APY.
Update 01/30/09: OnBank's savings account yield had fallen to 1.30% APY.
Update 01/17/09: OnBank's savings account yield has fallen to 1.90% APY.
Update 01/09/09: OnBank's savings account yield has fallen to 2.60% APY.
Update 10/03/08: OnBank's savings account yield has fallen to 3.60% APY.
Update 9/29/08: OnBank's savings account yield has been increased to 3.75% APY.
M&T Bank N.A. has started a new internet bank called OnBank. It has a no-minimum online savings account with a yield of 3.49% APY and with no monthly service charges. I called Friday and I was told OnBank is only about a month old, so hopefully, they'll maintain this rate for at least a few months. There's no guarantee, but new online banks often maintain their initial rates for several months.
One thing that may be better about OnBank is that it seems to have been designed to be completely online with an ACH transfer service. Below are some of the ACH details from OnBank's FAQ page, from OnBank's Web banking disclosure and from my conversation with the CSR on Friday.
- No limit on the number of links to external accounts (FAQ)
- $50,000 per transfer limit (per banking rep)
- Reports of fast ACH transfers with no holds. Reader left the comment:
I did a transfer from OnBank on Wendsday 16th. Transfer was done from OnBank. Thursday 17th debit from linked external checking to OnBank when i checked in the morning. Deposit to OnBank in account balance and in available balance when i checked in the evening.
- Trial deposits are used to verify external accounts. Note, corresponding debits are made after the deposits (web banking disclosure)
- $10 fee per ACH withdrawal after 4th ACH withdrawal during statement period (Money Market Savings disclosure)
Note, all savings accounts are limited by law to no more than 6 electronic withdrawals per month. Some other details I received from the CSR include:
- No hard credit inquiry in the application (just ChexSystem)
- No support yet for Quicken/MS Money (support is planned)
- No ATM card and no checks
OnBank also offers online CDs with terms from 3 to 24 months and a minimum deposit of $500. However, the current yields are low with yields that range from 2.50% APY for the 3-month term to 3.14% APY for the 24-month term. Update 7/24/08: OnBank's CD rates have gone up. Please check OnBank's website for the latest rates.
M&T Bank N.A.'s website does not include a link to OnBank's website, and M&T's FDIC page only lists M&T Bank N.A.'s URL. So I called M&T Bank N.A. and confirmed that OnBank one of its divisions. M&T Bank N.A. is a subsidiary of M&T Bank Corporation which has a large presence in the Northeast.
Thanks to the reader who mentioned OnBank in the finding-the-best-deals post.
Edit 8/05/08: I was informed by an OnBank banking rep that the ACH limit has recently been increased from $20K to $50K. The features list has been updated with this change.
Edit 4/17/08: Replaced the CSR info on ACH hold with comment from reader regarding ACH speed and holds.
Edit 4/15/08: More ACH updates from comments ($10 ACH fee and debits of trial deposits)
Edit 4/14/08: Updated ACH details based on disclosure info pointed about by commenter.