The German financial technology company Deposit Solutions launched an online savings marketplace in the US late last year called SaveBetter.com. The website is intended to make it easy for customers to open and manage accounts at multiple banks. The SaveBetter website allows customers to complete just one registration that can be used to open accounts at multiple banks without having to go through different registrations at each bank website. In addition to only having one registration, customers access the online accounts and statements at the different banks from the SaveBetter website.
Multiple FDIC-member banks partner with Deposit Solutions to be included at SaveBetter.com. These partner banks will hold the deposits which will give the deposits FDIC insurance up to the FDIC coverage levels. When customers make deposits and withdrawals, the funds are transmitted through a custodian bank, which is also an FDIC member. According to the SaveBetter’s FAQ, “your funds are held at a federally-insured bank at all times.”
We’ve verified that Deposit Solutions is a legitimate company that controls SaveBetter.com. You can read about Deposit Solutions and SaveBetter.com from Deposit Solutions’ press release and from this Reuters article.
SaveBetter’s Partner Banks And Their Products
Currently, there are only three partner banks that are listed at SaveBetter:
The available products from these banks include online savings accounts, standard CDs and no-penalty CDs. Each product has its own Product Terms with many account details. Currently, all three banks have very similar product terms, and as you would expect from the SaveBetter platform, each product has the same application features and limitations.
Some noteworthy limitations and features:
No joint accounts can be opened. Only individual accounts can be opened (according to the FAQ).
Beneficiaries cannot be designated in the application. However, the CSR said that a customer can call to add beneficiaries.
Accounts cannot be opened in an IRA. The CSR said that this is a popular request that may be addressed in the future.
Regarding a hard credit inquiry in the application, the CSR said that they do not check your credit. They only confirm your identification in order to comply with federal law.
To fund an account, you establish a link to your existing bank or credit union account. According to the SaveBetter website:
Your funds move from your financial institution to SaveBetter’s custodian bank, where it’s held safe and secure.
From start to finish, your money will be with an FDIC-insured bank, guaranteed for up to $250,000 per depositor per bank.
Currently, the custodian bank is Central Bank of Kansas City.
Online Savings Accounts
|0.50%||-||-||Ponce Bank||Ponce Bank High Yield Savings|
|0.30%||-||-||Central Bank of Kansas City||High Yield Savings Account|
Currently, each of the three banks offer a savings account. All have a minimum opening deposit of only $1, and the listed APYs apply to all balances. There are no monthly service fees. There’s also no fee for excessive withdrawals. According to the Products Terms documents, the accounts would normally be limited to six withdrawals during a monthly statement cycle. However, enforcement of this limit is suspended until further notice (The Federal Reserve allowed banks and credit unions to do this last year).
As is typical for online banks, little information is provided about the bank-to-bank ACH transfer service. Via online chat, I learned that the initial funding link would be used to make additional deposits and withdrawals. According to the CSR, there is no dollar limit on the transfers. Many new online banks have small limits like $5k. Only one link can be established. They don’t allow multiple links to multiple banks. I also asked if they would allow ACH transfers that were initiated by the customer’s external bank or credit union? According to the CSR, they do not allow this. Perhaps the middleman-type arrangement is the reason for external transfers not being allowed.
Online Standard CDs
|0.70%||$1||-||Continental Bank||45 Month High Yield CD|
|0.45%||$1||-||Continental Bank||6 Month High Yield CD|
Currently, only Continental Bank is offering standard CDs. Minimum deposit is only $1. Interest is compounded daily and credited monthly. The funding of a CD is the same as funding the savings account. You establish a link to your existing bank or credit union account, and that link is used to fund the CD. At maturity, the CD will not automatically renew. According to SaveBetter, “when one of your CDs reaches maturity, SaveBetter automatically sends the funds to your linked account.” Partial withdrawals are not allowed. Only a one-time full withdrawal of the CD is allowed. If funds are withdrawn before maturity, interest is credited through the date of withdrawal. The early withdrawal penalties are listed in the Product Terms and are as follows:
- Terms less than 12 months: 90 days simple interest
- Terms from 12 months to 5 years: 270 days simple interest
Online No-Penalty CDs
|0.45%||-||-||Continental Bank||11 Month No Penalty CD|
|0.40%||-||-||Continental Bank||3 Month No Penalty CD|
|0.30%||$1||-||Central Bank of Kansas City||9 Month No Penalty CD|
Continental Bank and Central Bank of Kansas City are currently offering no-penalty CDs. These have the same features as the standard CD features (listed above). The only difference is the lack of an early withdrawal penalty. Like the standard CDs, withdrawals may only be done 7 days after opening. Also like the standard CDs, partial withdrawals are not allowed.
This is an interesting concept that can make it more convenient for savers. However, there are several issues.
First, the customer depends on a middleman to interface with the bank. In this case, the middleman is Deposit Solutions via SaveBetter.com platform. This may simplify the account applications and account management, but it adds some risk. I think the risk is low, but there’s always some added risk when you go through a middleman to access your accounts rather than accessing your accounts directly with the bank.
Second, there are some significant limitations. Not allowing joint accounts is one. Not offering IRAs is also a significant limitation.
This online savings marketplace concept could have the most benefit for IRAs if it could allow customers to open multiple direct CDs at multiple banks inside one IRA. The process of transferring IRAs from one bank to another bank is rarely quick and easy. According to the CSR, they’ve received many requests for IRAs. If SaveBetter can bring in several banks to offer savings products inside an IRA, that will give them a big advantage over any one online bank that offers IRA CDs and savings accounts.
The third issue is the lack of partner banks. Currently, there are only three partner banks, and none of the three are currently offering anything that’s very competitive. This concept could be more useful if the number of partner banks goes up significantly and if there are at least a few that offer very competitive rates.
The lack of credit unions is another major limitation, and I doubt that credit unions can be included in the future. As we know, many of the best CD deals are from credit unions.
Deposit Solutions may find it difficult to attract many banks. There is a risk that the FDIC will consider deposits acquired through SaveBetter as brokered deposits. That will be a negative for many banks since brokered deposits are treated differently by regulators. For one, if the bank has financial problems, the regulator can prohibit brokered deposits. Banks may prefer to establish their own online banks and not worry about this risk. Also, the banks pay fees to Deposit Solutions to be included in SaveBetter. That may also discourage banks from joining.
On the plus side, Deposit Solutions is a major German financial technology company with significant resources. According to this 2019 Business Insider article, Deutsche Bank made a $55 million investment into Deposit Solutions which made it “the second most valuable German fintech.” They appear to be in the deposit business for the long haul.
The financial resources of Deposit Solutions may be what’s allowing SaveBetter to offer some nice sign-up bonuses. SaveBetter currently has two sign-up bonuses: a $125 bonus for opening any of their products (listed at SaveBetter.com) and a $150 bonus for opening a savings account at Ponce Bank. An overview of the $150 bonus with a link is listed in the DA Bonus Offers page. I’ll have more on these offers soon.