Bank Deals Blog: Internet Banks

In a Forum post last week, DA reader, tbc3, noted that,

As I noted in yesterday’s Liquid Summary, Comenity Direct is one of a handful of online banks that have changed the trajectory of their rates with modest increases, partially reversing rate cuts made in early March. In doing so, Comenity Direct seems to have joined other online banks that are stretching out their transition to low rates.

Widespread rate cuts continue on online savings and money market accounts. The last emergency Fed rate cut that lowered the federal funds rate to the zero bound was just over two weeks ago. Most online banks appear to be following a strategy of stretching out the transition to low rates. A few have decided to act quickly with large cuts.

One interesting twist to the rate cuts is that a couple of online banks have changed course. They have partially reversed their early March rate cuts with modest rate hikes. So...

Oklahoma-based Gateway First Bank (Gateway First) has begun to offer a series of CDs on a limited nationwide basis (38 states). The 12-, 24-, 36-, 48-, and 60-month CDs all earn the APYs: 2.02% ($25k minimum deposit) and 1.92% ($500 minimum deposit). While there is no stated deposit cap, the FAQs state there is a “$500k maximum limit when funding by ACH online.”

Three of CDs offered by Utah-based Merrick Bank were added to this week’s CD Rates Summary, following recent modest rate increases (5-10 bps). The minimum opening deposit for any Merrick Bank CD is $25k, with a $250k balance cap. Any interest accrued and paid into the CD is exempt from the $250k balance cap.

All of the following quotes come from the very comprehensive...

As you were reading yesterday’s CD Rate Summary, you may have noticed CIT Bank’s 11-month No-Penalty CD (1.70% APY) near the top of the nationally available, under-one-year CD category. The 11-Month No-Penalty CD requires a minimum deposit of $1k, with no stated balance cap.

CIT Bank’s 12-month Term CD currently offers a competitive 1.86% APY, one of the highest rates offered by an internet bank on 12-month CDs. The 18-month Term CD rate is just...

We continue to see widespread CD rate cuts as the coronavirus pandemic has forced the government to shut down large parts of the economy. More CD rate cuts should be expected as banks and credit unions continue to respond to the Fed’s emergency rate cuts that have pulled the federal funds rate back down to the zero bound. The increasing odds of a recession are also putting downward pressure on CD rates.

Not all CD rates have fallen. When there is a financial crisis, CD rates can sometimes rise as banks...

Since my American Express National Bank (American Express) blog post five days ago, the rate on its 60-month CD was lowered by 15 bps. The new 2.00% APY is still near the top for 5-year CDs offered by online banks.

What’s more interesting is that American Express has raised the rate on its 12-month CD to 1.85% APY. The addition of 130 bps has given the 12-month CD its highest APY since DA began...

Ally Financial, the parent of Ally Bank, issued this press release yesterday announcing a relief package that’s intended to help people to deal with the coronavirus pandemic. The relief package is intended to support customers, auto dealers, communities and employees. Ally Bank customers may find the following support useful:

For savers, the waiver for the excessive transaction fee is noteworthy. Ally Bank normally charges $10 for each withdrawal (excluding some withdrawal types) from the Online Savings Account or Money Market Account that exceeds 6 per statement cycle. If you’re using your...

In the last two weeks since the last liquid account summary, there have been two emergency Fed rate cuts which have lowered the target federal funds rate to near zero (the zero bound). Online banks were just starting to respond last week to the March 3rd Fed rate cut, and a few are already responding to the Sunday Fed rate cut. In the next month we should expect widespread decline to the rates of online savings and money market accounts.

If the online banks follow what they did during the last...

After Sunday’s massive Fed rate cut, banks and credit unions will surely be responding quickly with widespread CD rate cuts. Before you decide to apply for an online CD, make sure you understand how the institution will lock the rate in the account opening process. A comment on my Sunday Fed blog post by DA reader, mattp, reminded me of the generous rate lock policy at American Express National Bank (American Express). As mattp noted,