It has been just over a year since Emigrant’s internet bank MySavingsDirect was launched with a 1% APY, and I’m happy to report the rate has held. In fact, the rate went up 5 basis points in September. The rate is now 1.05% APY which is near the top for internet savings accounts. Only UFB Direct’s savings account has a significantly higher rate (1.25% APY), but that requires a $25K minimum balance. MySavingsDirect has no minimum balance requirement.
MySavingsDirect is the third internet bank that Emigrant Bank has started over the last 10 years (if you exclude BancoFortuna). As I mentioned in my first review of MySavingsDirect, Emigrant’s two other internet banks don’t have a good reputation of maintaining competitive rates. However, based on their history, there’s a good chance that MySavingsDirect will remain competitive for at least another year.
Restrictive ACH Transfer Service - Improves Security?
Several readers have commented that MySavingsDirect’s ACH transfer service is a deal killer for them. Emigrant’s internet banks have always been restrictive on ACH transfers and policies, and MySavingsDirect is no different. Below is a summary of these policies and features:
- They don’t allow ACH withdrawals initiated by another bank. External ACH deposits are allowed (CSR)
- Maximum of 2 linked accounts which includes the initial funding account (Q&A)
- Establishing second linked account requires mailing in a voided check and form (Q&A)
- Maximum amount that can be transferred via ACH (in/out) is $500,000 (CSR)
- Linked accounts can only be personal checking accounts (Q&A)
I called MySavingsDirect’s customer service today and confirmed the above features and policies are still in effect. I was told that you can open multiple savings accounts that can be viewed by one username/password combination, and immediate internal transfers can be done between these accounts. This would allow you to link more external accounts. One problem with this is that internal transfers still count toward the monthly limit of six withdrawals.
I asked the CSR why Emigrant has such restrictive features compared to other internet banks. The CSR claimed this is due to security. If a hacker steals your MySavingsDirect account number, the hacker can’t initiate an ACH withdrawal to drain your account, and if the hacker steals your username and password, the hacker won’t be able to link an external account that can be used to steal your money. I’m not sure if these restrictive ACH policies are really needed to protect customer funds. I think banks have many other ways to ensure security without these restrictions. Also, by regulation, banks are responsible for money in consumer accounts lost due to electronic fraud. Consumers just have to make sure they monitor their accounts. So these restrictions may be intended more to save the bank money rather than consumers, if criminal hackers are able to break in. I’ll have more on this issue of account security in my series of articles on the safety of your money at banks.
MySavingsDirect is one of the three internet banks (EmigrantDirect and DollarSavingsDirect are the others) that are divisions of Emigrant Bank. Emigrant Bank’s history dates back to 1850. According to Crain’s New York Business, the bank has been owned by the Milstein family, one of New York's most powerful real estate dynasties, since 1986. Two years ago, Emigrant sold 30 of its 32 branches to Apple Bank for Savings. Its remaining two branches are located at New York City on 42nd Street and in Ossining, New York.
Emigrant Bank’s financial health has been a little weak since the financial crisis. Last year the parent company of Emigrant Bank finally exited the government TARP program. Currently, Emigrant Bank has an overall health grade at DepositAccounts.com of a "C+" with a Texas ratio of 34.15% (average) based on June 2014 data. Please refer to our financial overview of Emigrant Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 12054).