VirtualBank is back in the Game! 4.60% MMA

[ken1706]

I had almost given up on VirtualBank. Its last rate increase was back in September when it raised its MMA from 3.40% to 3.55%. Before that it had done a decent job to at least stay around ING's rates.

Looks like VB wants to get back into the game. Today it raised the APY of its eMoney Market account to 4.60%.
http://www.virtualbank.com/Banking/MoneyMarket.aspx

Unlike ING and HSBC, this doesn't look like a promo rate.

I've been happy with my eMoney Market account. I haven't kept much in there due to the low interest rate, but I found it useful for opening a CD with them. Note, they also raised CD rates (1-year CD is now 5.10%). I've also been happy with their customer service. Before and after my account, they've done a good job at answering my emails.

One thing to note, opening a CD wasn't as easy as opening an ING Direct CD. There were some complications.

Another nice perk with VB is their referral bonus. Unlike ING, the details are publicly available:
http://www.virtualbank.com/Banking/ReferFriend.aspx


Now the question is when will EmigrantDirect respond? They're going to have to raise their savings account rate to 5% if they want to make an impression.

[gavinmccallister]

Originally Posted by ken1706

Now the question is when will EmigrantDirect respond? They're going to have to raise their savings account rate to 5% if they want to make an impression.

I have heard that Emigrant gave $1000.00 to each account holder in the areas affected by Hurricane Katrina. I wonder if that has any affect on them not wanting to raise their rates too high too quickly. In my opinion they want to possible recover some of that money through increased deposits.

Personally, I want them to move up to 5% soon to I have seen way to many banks offering higher rates while Emigrant stills claims to have America's highest rate, in my opinion if you are going to claim having the highest rate you have to be consitent <sp?> about it.

[sweeps]

That was definitely a nice gesture that Emigrant gave $1000 to its customers in the Katrina areas. But don't you think that the people who can't afford to save any money probably needed the help more? Just a thought.

[ken1706]

Yup, Emigrant did indeed make those $1000 gifts. Here's the September 8th press release

It would be interesting to know how much they gave. I searched the FDIC and the September 30th financial statements. I'm not sure if these donations would have been recorded by then or under what category they would be placed. The only thing I could find was "Additional noninterest expense" of $732K. So this would be 732 members which sounds about right.

If it is $732K, it wouldn't be that large compared to their $1.38B in assets. So this may not have had much of an effect on their rate decisions.


Looks like Emigrant started a new trend for online banks: make a big rate increase, get the free advertising and then don't worry about raising rates for several months.

ING Direct and HSBC both did their big rate jumps although they set end-dates and ING only applied it to new money.

Now VB is giving it a try. It'll be interesting to see how long they'll keep the rate at 4.60%. I wouldn't be surprised if it stays that way through the year even as other banks reach 5%.

[Russell]

Can someone pls give me a refresher on the difference between a MMA and Savings account ? I thought MMA was usually held with financial institutes where you had a brokerage account so you could buy stocks right when you decide to without worrying about the money transfers etc ?

[ken1706]

CRFSaver had a very good definition in this post

A Money Market DEPOSIT account is a transaction account (you can write checks off of it) that is insured by the FDIC. A regular Money Market account (such as offered by a brokerage) is not insured by the FDIC. MMDA's were authorized in the early 80's by the DIDCMCA and Garn St. Germain acts. A savings account is different in that it is non-transactional, i.e. you cant write a check off of it.

Often the term Money Market Accounts or MMA is used as a shorten version of Money Market Deposit Account.

The main requirement of both a Savings and MMAs are limited withdrawal capabilities. This is also in the law. Both types of accounts are limited to 6 withdrawals per statement.

Seems like many banks don't accurately define their accounts. Virtual Bank is one example. A Savings account would be a better term for their eMoney Market Account since it doesn't have check writing.

[Ima saver]

I am pretty new to this forum and I never heard of this bank. Are they FDIC insured? I went to the site, they call it a money market account, but nothing is said about checks and that is what money market accounts are about.

[ken1706]

Virtual Bank is an internet subsidiary of Lydian Private Bank which is FDIC insured. Virtual Bank hasn't done the advertising of ING or HSBC so they are not as well known. Also, their rates had been lagging for awhile so this also kept them out of the spotlight.

Their eMoney Market account should really be called a Savings account since it doesn't have check writing capabilities. It's designed to work just like ING Direct or EmigrantDirect. You link it to an existing checking account and make transfers/withdrawals through your online account.

[Ima saver]

Thanks Ken for the explaination.