Federal Reserve, the Economy and CD Rate Forecast - Nov 19, 2019
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Banking 101: Understanding the Different Types of Savings Accounts
Banking 101: How to Transfer Money From One Bank to Another
New Internet Bank with Savings Account and CDs Launched by Barclays
The U.S. division of Barclays has just launched an internet bank offering an online savings account and online CDs. Barclays is a British multinational megabank. One of their U.S. subsidiaries is Barclays Bank Delaware which is best known for partnering with U.S. companies in offering co-branded credit cards. They now have an internet bank with an online savings account and online CDs. I called the bank today, and I confirmed that people in any state can apply online. I was told that this is their first week in operation.
Unlike the launch of TIAA Direct, Barclays has decided to keep their rates only moderately competitive. The savings account has a 1.00% APY as of 3/23/2012. With TIAA Direct still offering 1.25%, it's hard to get excited about Barclays. However, in today's awful interest rate environment, 1.00% is competitive for savings accounts. The bank's online CD rates are also nothing to get excited about. There are a few that are moderately competitive. These include a 1.75% APY 5-year CD, 1.60% APY 4-year CD and a 1.40% APY 3-year CD (as of 3/23/2012).
Even though the rates aren't great, it's nice to see another internet bank. Without top rates, I don't see a reason to open an account right now. However, if they prove to be competitive over time, they may be something to consider in the future.
The features are typical for online banks. There's a fairly comprehensive FAQs section. There's also an online terms & conditions document. Here's a list of some of the important savings account features.
- No minimum balance, no monthly fees
- POD accounts can be set up in the application
- Accounts are funded via ACH from a linked external account. Test deposits are used to verify your external account.
- Interest is compounded daily and credited to your account monthly.
- Customer Care at 888-710-8756 (8:00am to 8:00pm ET)
Some of the noteworthy savings account features include:
- ACH transfer service for for electronic deposits and withdrawals
- 5-day hold for ACH deposits (CSR)
- No maximum amount for ACH transfers (CSR)
- Transfers to your external account will normally arrive 2 to 3 business days after they are executed
- Remote Deposit for making deposits with your home PC scanner or iPhone, Android, or BlackBerry smartphone
- Remote Deposit maximums: $5K per check, $10K per day, $50K per 10-day period
Some of the noteworthy online CD features include:
- Early withdrawal penalty for all terms is
90 days(see post) of interest on principal withdrawn - Early withdrawals explicitly allowed: "You may, subject to an early withdrawal penalty, make withdrawals of principal from your CD Account before maturity." (T&C)
- 14-day grace period at maturity
It's nice to see that the CD early withdrawal penalty is only 90 days (see post) of interest. That comes close to Ally Bank's 60-day EWP. Most banks have EWPs of at least 180 days on its long-term CDs.
FDIC Insured?
According to the internet bank's FAQs, "deposit accounts are FDIC insured" and "deposit accounts are offered through Barclays Bank, Member FDIC".
With any new online bank, I'm always a little concerned that it's legitimate. The banks often don't make it easy to verify. You can verify that Barclays Bank Delaware is a FDIC member at this FDIC page. The URL listed by the FDIC is www.barclaycardus.com which is the bank's credit card business. The internet bank URL is www.banking.barclaysus.com, and unfortunately, I can't find this internet bank mentioned anywhere at www.barclaycardus.com. I did verify that the registrant for the domain name barclaysus.com is Barclays Bank Delaware.
We do have a financial overview of Barclays Bank Delaware. It has $15 billion in assets and just under $7 billion in deposits. The deposits are a little low compared to the assets. That may be the reason they're starting to take deposits from the web.
The bank is very healthy with an overall health score at DepositAccounts.com of 5 stars (out of 5) with a Texas Ratio of 6.92% (excellent) based on December 2011 data. The bank has been a FDIC member since 2001 (FDIC Certificate # 57203).
In 1965, Barclays established a US affiliate, Barclays Bank of California in San Francisco. In 1988, Barclays sold Barclays Bank of California to Wells Fargo Bank, N.A.
However, as of 11/2015, their interest rates on the savings account is still good, but not near the top as they had been. But if you want a trouble-free online savings account I highly recommend.
Opened a TIAA account at the same time - I had more trouble and hassle with TIAA then Barclays. Would highly suggest just based on customer service.
"You authorize us to communicate with you using any current or future means of communication, including, but not limited to, automated telephone dialing equipment, artificial or pre-recorded voice messages, SMS text messages, email directed to you at a mobile telephone service"
Implication: you can be subjected to spam and marketing calls without recourse
"Your obligations under this Agreement continue even after the Account is closed. We reserve the right to re-open an account; any re-opened account will be subject to all the terms and conditions then in effect for that type of account."
Implication: even after you think the account is closed, they may declare it "re-opened" and charge you whatever low balance, inactivity, etc. fees that could be dreamed up later.
Just beware what you are signing up for.