With rate cuts becoming more common at Dollar Savings Direct (rate just recently dropped from 3.50% to 3.20% APY), you might be thinking about withdrawing your money. Unfortunately, Dollar Savings Direct doesn't make this easy due to the following reasons:
- Can't initiate a withdrawal from another bank
- Limited to 2 linked accounts
- Creating a second link requires mailing in a voided check
- The process of linking a second account is slow
The three important features of an ACH bank-to-bank transfer system include: 1) process of linking to external accounts, 2) limitations on the size of the transfers, and 3) the speed of the transfers. All savings accounts and money market accounts have limits on the number of certain types of withdrawals (which includes ACH). Federal regulation limits these to 6 per statement cycle.
Dollar Savings Direct does well on features #2 and #3, but it is lacking on feature #1. The ideal system for linking external accounts allows you to electronically link an unlimited number of checking or savings accounts with only a trial deposit verification system. You would not be required to mail in forms or voided checks.
For your second link, Dollar Savings Direct not only requires trial deposits, but it also requires you to mail in a voided check along with an authorization form. I called yesterday and asked about how long this might take for the second account to be linked. According to the CSR, Dollar Savings Direct will mail an account verification form to the other bank which must then be mailed back to Dollar Savings Direct. I was old this process can take up to 3 weeks depending how fast the other bank resonds.
A FW member mentioned that Emigrant Bank may allow other ways to verify the external account if the other bank is taking too slow. If you call, they may be willing to allow other options. He mentioned one case in which they accepted an emailed copy of a bank statement as verification and initiated the trial deposits the same day.
Another oddity of Dollar Savings Direct is that this voided check is not required when you link the first account during the account opening process. This has allowed many people to link savings accounts and brokerage accounts. One note about linking savings account is that the pair of trial deposits are followed by a pair of debits. So between these debits and the initial deposit, your savings account will be hit with 3 ACH withdrawals which could put you over the limit of allowed withdrawals.
For the full review of Dollar Savings Direct savings account and CD, refer to my Dollar Savings Direct review post. Note, Dollar Savings Direct and Emigrant Direct are both internet divisions of Emigrant Bank (FDIC Certificate # 12054).