New Fintech, HMBradley, Announces Unique High-Yield Bank Account

The new fintech, HMBradley, has launched a website describing a new digital banking platform that offers a deposit account with a 3% APY. As is typical with new fintech companies, there’s only a waitlist. Also, there are many details to qualify for the 3% APY. Just like last December when Robinhood received media attention for an announced 3% bank account, HMBradley has started to receive media attention. This Money.com article was published yesterday.

The unique thing about HMBradley’s proposed deposit account is the Savings Tiers which are based on how much you saved from your direct deposits. Here is an HMBradley FAQ that describes the Savings Tiers:

Savings Tiers are the way we measure and reward our customers. Your Savings Tier is calculated based on the percentage of direct deposits that remain in your HMBradley account at the end of a calendar quarter. Simply put: the more you save, the higher your annual percentage yield is (“APY”).

Our Savings Tiers have the following APYs:

• Tier 1 - 3.00% APY: Saving =20% of direct deposits
• Tier 2 - 2.25% APY: Saving 15% to <20% of direct deposits
• Tier 3 - 1.50% APY: Saving 10% to <15% of direct deposits
• Tier 4 - 1.00% APY: Saving 5% to <10% of direct deposits

You must have a direct deposit set up and save at least 5% of your quarterly deposits to qualify for a Savings Tier.

Another FAQ describes how direct deposits must be real direct deposits from an employer or agency. And another FAQ lists an important limitation: They only “pay interest on total account balances up to $100,000.”

As you can see, even if the deposit account launches as advertised, it’s not going to be that great of a deal. HMBradley is also advertising a sign-up bonus of up to $500. However, the bonus qualifications are even more complicated than the Savings Tiers. Here’s part of the FAQ on the “Waitlist Bonus Qualifying Terms”:

3% APY bonus paid on the total amount of direct deposits made in a new HMBradley account in the first 30 days from the first direct deposit and for the period between customer sign-up on waitlist until accounts are available on hmbradley.com (Bonus not to exceed $500).

Other Proposed Features

In addition to paying interest rates that are based on how much you’re saving, HMBradley describes additional features for its announced deposit account. First, they are promoting it as a single account that offers the benefits of both a checking account and a savings account. An FAQ describes this:

What is the benefit of having one single account vs. both a checking and savings account?

We believe banking should be simple. We also believe you should get paid interest on all your deposits. With us, you only need one account to earn interest.

Another FAQ identifies the deposit account as a Negotiable Order of Withdrawal (NOW) account. As this CFPB page describes, “NOW accounts are essentially checking accounts.”

I can’t find any mention on the HMBradley website of the account features. The Money.com article did say that “customers will have access to over 55,000 STAR Network ATMs,” and that online bill pay will be available. These features would be expected from a checking account.

Safety of HMBradley and Their Deposit Account

It’s important to note that HMBradley is not a bank. An HMBradley FAQ reads as follows:

Is HMBradley a bank?

HMBradley is not a bank. All HMBradley deposit accounts are opened by and held with a sponsor bank. These accounts are insured up to $250,000 per depositor.

It appears HMBradley will be partnering with a bank. Customers will go through HMBradley to open and manage the bank account, but the sponsor bank will be the one that actually holds the deposits. This is a common model that has been used by fintechs for many years.

It should be noted that there’s currently no mention of sponsor bank’s name. Before opening any bank account through a fintech, it’s important that you know the bank’s name. This allows you to confirm the partnership relationship and the FDIC coverage.

I’m a little concerned that HMBradley website has very little information on the company. There’s no “about” page. There’s no company history, and there’s no mention of the management and investors.

With so little information, I think it makes sense to wait before signing up on their waitlist. I’ll give them a second look once I see company information and the name of their sponsor bank.