The U.S. credit card unit of Barclays is officially launching its new internet bank today. I first reported on the new internet bank when it started offering its savings account and CDs in March. The internet bank is intended to diversify Barclays funding for its credit card business. According to Reuters:
The card business currently gets roughly half of its funding from so-called brokered-deposits, which are generally considered less stable than deposits made by individuals. The other half of the funding comes from the subsidiary's London-based parent.
As I mentioned in my March review, the online accounts have some nice features. Rates are fairly competitive, but they're not anything to get excited about. The savings account APY is 1.00% for all balances as of 5/7/2012. The only two internet banks offering higher non-intro rates than this are TIAA Direct with a 1.25% APY and MyBankingDirect with a 1.15% APY.
Barclays online CDs have terms from 3 months to 60 months. Only its long-term CD rates are competitive. Below is the list of the most competitive rates as of 5/7/2012:
- 1.75% APY 5-year CD
- 1.60% APY 4-year CD
- 1.40% APY 3-year CD
- 1.15% APY 2-year CD
One nice feature of these CDs is a small early withdrawal penalty of only 90 days of interest. This is almost as small as Ally Bank's EWP of 60 days of interest. There is one downside as a reader noted in my last review. CD holders currently cannot receive interest disbursements. So they will have to let the interest get added back to the CD. These details are listed in Barclays FAQs.
I have more details on the savings account and CD features in my March Barclays online bank review.