Online only bank

[puddonhead]

Originally Posted by PresidentO

Hmm. 5.25% on 25K is 1500 per year. With other banks such as ING and every one close to the 2% APY, I am just wondering how can these guys afford to give 5% APY. I remember reading some where that FDIC is actually going after the banks that are actually giving high APY's.

I am not 100% sure - but I have guesses.

They count on becoming your one stop bank. That is where the minimum debit transaction requirement, direct deposit requirement etc come in. If you take 100 normal customers - 95 of them will simply park all his/her money in this bank and use its debit card for all purchases. That will net the bank ~20c each debit transaction in fees.

So basically, the rate chasers like me represent the 5% minority who are not profitable for the bank. But this type of an account allows them to get 95% others who are actually profitable for the bank.

But anyway - as long as they are FDIC insured (and you have verified that independently from FDIC website/phone) - I am not too sure I will worry too much about it.

[desitechie]

I used to have the savings account in WAMU till last year when they had 3-5% APY. Now that its acquired by Chase, they have lowered it to 1%.

After lof research, i moved my money to GMAC bank which is quite stable unlike GM and also FDIC insured.

Thanks

[a_tyagi26]

Originally Posted by puddonhead

I am not 100% sure - but I have guesses.

They count on becoming your one stop bank. That is where the minimum debit transaction requirement, direct deposit requirement etc come in. If you take 100 normal customers - 95 of them will simply park all his/her money in this bank and use its debit card for all purchases. That will net the bank ~20c each debit transaction in fees.

I thought transaction fees was 3-5% and it went to visa, mastercard, amex etc and not the bank. Why do bank get any fees from purchases?

[ilikekilo]

Originally Posted by desitechie

I used to have the savings account in WAMU till last year when they had 3-5% APY. Now that its acquired by Chase, they have lowered it to 1%.

After lof research, i moved my money to GMAC bank which is quite stable unlike GM and also FDIC insured.

Thanks

I could be off but GMAC was almost at the brink of bankruptcy at one point .. I know your deposits are all FDIC secured and al..but look at the stanford bank , its a big mess and customers who wanted to withdraw money were sent back...imagine that..now one has the wait until the GOVT settles all the crap and u get ur money..god knows when...


bottomeline: if its too good to be true it probably is not ... so watch out on those so called HIGH YIELDS...as tey can change any time and worst case be gone like in the stanfords case

http://articles.latimes.com/2009/jan...iness/fi-gmac3

[ilikekilo]

Originally Posted by a_tyagi26

I thought transaction fees was 3-5% and it went to visa, mastercard, amex etc and not the bank. Why do bank get any fees from purchases?

I think banks as well as VISA/master/amex/disco networks charge , its just a matter of who charges how much..

so banks charge too much even if VISA or whoever charges tehm less..



http://www.indexcreditcards.com/inte...ansactionfees/

[puddonhead]

Originally Posted by a_tyagi26

I thought transaction fees was 3-5% and it went to visa, mastercard, amex etc and not the bank. Why do bank get any fees from purchases?

I don't have any special insight into the workings of credit/debit card processing - but I doubt that would be the case. How would Citibank - for example - make any money off credit cards if it does not earn any transaction fee? They have the interest income on people carrying balance - but that is somewhat counterbalanced by credit losses from deadbeats. And I doubt they would be interested in keeping current customers (like most of the immigrants) if they were not earning any money off them.

Maybe members who work in one of the credit card companies could shed some light.

[desitechie]

Originally Posted by ilikekilo

I could be off but GMAC was almost at the brink of bankruptcy at one point .. I know your deposits are all FDIC secured and al..but look at the stanford bank , its a big mess and customers who wanted to withdraw money were sent back...imagine that..now one has the wait until the GOVT settles all the crap and u get ur money..god knows when...


bottomeline: if its too good to be true it probably is not ... so watch out on those so called HIGH YIELDS...as tey can change any time and worst case be gone like in the stanfords case

http://articles.latimes.com/2009/jan...iness/fi-gmac3

You are partially right in the sense GMAC was almost in bankruptcy till FED bailed out last year Dec 2008.

GMAC bank is a separate enitity and is now well capitalized with 4 stars from bankrate.com.

[dhirajs98]

I bank with hsbcdirect and ingdirect. Both are doing okay. At present hsbcdirect is giving better interest rates.

[kevinkris]

I opened it online. ACH is also good.
Good CD.

Any number of deposits.
Withdrawls cannot be more than 3 per month or so.

[desitechie]

Originally Posted by kevinkris

I opened it online. ACH is also good.
Good CD.

Any number of deposits.
Withdrawls cannot be more than 3 per month or so.

Etrade is down to 2.15% these days.

[pointlesswait]

ing direct is good.. they used to have rate of 3.5%couple of months back..now its like 2 to 2.5%.. i have been using them for 2-3 years..
i think ING also offers a debit card facility .. if you have a direct deposite checking account...so check it out...

Sharebuilder is not a great service.. u can buy stocks at 4$ but u pay 15 for selling... and its a window trade... if u want to trade realtime... u pay 15 per trade.. (that was when i used to use sharebuilder)

Originally Posted by rvr_jcop

ING Direct is pretty good. It gets all the marks w.r.to the user interface. Another plus is they recently bought sharebuilder if you are into stocks and they support buying fractional shares.

One downside to ING, they are the first to reduce the interest rates in down market and last to raise them in an up market. But still, its user interface and customer service are its huge plus points and very popular too.

But in reading various blogs, FNBO Direct (base in Omaha?) is #1 choice for a majority and they pay better interest too.

Hope this helps.