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Flooded by Deposits, Banks Restricting Applications - FAB&T and SFGI Direct


There were more cases this week of banks with good deals restricting new applications after being flooded by deposits. First Arkansas Bank & Trust stopped accepting nationwide applications for its reward checking account on Monday. Only applications from Arkansas residents are now accepted. FAB&T's reward checking account with a 4.44% APY on balances up to $50K had become especially attractive since most other reward checking accounts with rates above 4% have caps of only $25K. In addition FAB&T has a long history with this rate which dates back to February 2008 (see post).

The other bank to restrict applications was SFGI Direct which is offering a no-minimum online savings account with a 2.25% APY. The new internet bank temporarily stopped accepting new applications on Monday. I first reported on this savings account in this late July post.

In both of the above cases, at least the banks didn't cut rates. Hopefully, they'll keep rates competitive. I was told by a SFGI Direct representative that they intend to be one of the top 5 with the best online savings account rates. So they may keep their rates competitive, but this doesn't mean much if you are unable to open an account.

The above cases show how much demand there must be for some decent interest rates. Savers who want to avoid risking principal don't have many alternatives these days. Money market fund rates are even worse than saving account rates. I keep track of a few money market funds in my weekly rate summary. The best yield is currently being offered by the Fidelity Money Market Fund which offers a 7-day yield of only 0.34%. Treasury yields are not much better. They've gone up a little bit in the last couple of weeks, but they're still very low. As of 8/11/09, the 2-year yield was 1.21% and the 6-month yield was 0.28%. With higher rates at banks along with the new temporary $250K FDIC limit, banks are attracting more deposits.
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Len   |     |   Comment #1
Opened with FAB&T last week, just received the welcome kit in the mail yesterday 8/12. Guess I made it just under the wire. I am trying to call them with a couple of questions, and have been on hold 30 minutes already. It does seem they are totally overwhelmed, which probably means the rate won't last. This is so depressing, you move from bank to bank. I am reminded of the guy in the movie Cheap Detective who could not stay in a single hotel overnight because none would have him an entire night. His disgusting perfume was so bad, he had to move from hotel to hotel all night long...this is what it is like to have money today. No one wants you.
Len   |     |   Comment #2
Waited on hold 90 minutes and gave up. FAB&T is totally overwhelmed. You can't get a human there.
Len   |     |   Comment #3
Waited on hold 90 minutes and gave up. FAB&T is totally overwhelmed. You can't get a human there.
Anonymous   |     |   Comment #4
Another prime example, why interest rates for deposits are staying so low. The banks are flush with cash.

The government has been telling us for years, we should be saving more for retirement. Now that we have, we earn very little on our savings.
steve   |     |   Comment #5
Can anyone recall any other time in the history of United States banking that banks turned away depositors?

If the behavior of these banks and Clear Sky earlier this year in limiting additional deposits doesn't indicate that there is something ****y about our banking system, I don't know what does.
Carlos   |     |   Comment #6
I have been with FABT for several months and have been happy with their customer service. They must have had a huge influx of new customers in the past week or so, and it's not reasonable to expect them to hire extra people just to answer your phone calls.
Rick   |     |   Comment #7
I normally have two rewards checking accounts. A few weeks ago I decided to go with FAB&T. Just as well. I ought to mention that the bank paperwork says that if you transfer money to external accounts, a $5.00 fee will apply for each transfer.

I wrote a review of my signup here:

Not that it is of much use to many of you now.
rahul   |     |   Comment #8
i have been with FABT for several months and have been happy with their customer service.
Anonymous   |     |   Comment #9
Once a bank starts to restricts deposits, it is a bad sign and the rate will fall soon.
Anonymous   |     |   Comment #10
I too opened the rewards checking account with FABAT a few months ago, and it was a relatively smooth process. The account has been just what it promised, no surprises or catches. And the rate and balance limit are great... I just hope it stays. Their online banking interface is good also, and I can use their ATM card abroad without excessive fees. Glad I got in with them, intime....
kow626   |     |   Comment #11
for real, steve. that's the first thing i noticed about the post. these guys aint the first to restrict deposits but it makes absolutely no sense. one would figure the banks would WANT as many deposits as possible. i can dig that they're understaffed and overwhelmed. but still, they need that money to exist and people are willing to give it. something just aint right somewhere.
Anonymous   |     |   Comment #12
I don't recall in the past when banks blocked you from depositing money into your account or stop accepting new accounts. But you also have to be aware that rapid money transfers and interstate banking was not that common decades ago. You wonder if the restriction is due to inability to cope with the volume or inability to manage a large amount of capital to serve the bank's operations. You keep seeing ads in the paper and TV about promotions on opening checking and savings accounts. It seems that the smaller operating banks are the ones who impose these restrictions and it might have something to do with their ability to handle and manage large numbers of accounts and massive amounts of capital.
Anonymous   |     |   Comment #14
If you cannot beat them, join them. We opened out account around Mid July and have been expecting the rate to drop. Well, nothing yet, so I am ACHing some srious money into FAB&T. Will not be surprised the rate will drop immediately after the fund is in:-)
Anonymous   |     |   Comment #15
I’m getting really competitive rates with a product called easyGROW Checking at First Bank & Trust. You can go to for the info (including the current interest rate); but to summarize, it is a free high-yield account that also offers ATM fee refunds when I meet the three qualifications: using my debit card at least ten times, receiving e-Statements, and having a least one direct deposit or automatic payment each cycle. I do all of those things anyway, so it’s been really easy for me to qualify…and they send me an email each month to let me know if I met the qualifications. I have to admit, I love not having to worry about whether or not an ATM is on my network, and the interest is already starting to add up. It only takes $100 deposit to open the account, and there is no minimum balance
Anonymous   |     |   Comment #16
Above Post: Sightly Off-Topic. The 4.01%/$25K limit is pretty standard among reward checking offers. Here we are discussing FAB&T and SFGI situations.
Anonymous   |     |   Comment #17
SFGI direct ABA routing number is 052202225

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