A number of E*TRADE Bank customers have written to Consumerism Commentary to inform me of this recent news. E*TRADE is planning to move its banking customers to Discover Bank. I have a savings account at E*TRADE but I have not yet received any communication from the bank.
Thanks to E*TRADE’s fast external ACH transfers, the bank has earned a spot on my list of the best online savings accounts. Nevertheless, this move might be good news for savers. E*TRADE is currently offering an interest rate of only 0.50% APY while Discover Bank is offering 1.35% APY. This increase in interest rate would easily cover one day’s lost interest income due to funds in transit from one bank to another.
I’m not surprised E*TRADE is exiting the banking scene. E*TRADE is primarily a brokerage. For some brokerages, banking may no longer seem like a worthwhile endeavor. The government is considering the separation of some banking functions with some investment functions, with discussions surrounding the Volcker Rule which would prevent the funds banks receive through deposits (savings accounts) from being used to be invested for the company’s behalf.
Also, investment banks rushed to be reclassified as bank holding companies in order to qualify for a part of the federal stimulus package. The era of bank bailouts is over, so this and the threat of more regulation will reverse this trend.
Although many customers have reported received similar emails warning of the impending transfer to Discover Bank, E*TRADE is still accepting applications from new savings account customers. Have you received this communication from E*TRADE Bank? I’m interested in giving Discover Bank’s online savings account a test drive, but I have not received information about the impending transition.
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{ 8 comments… read them below or add one }
The transition will occur only if you have no brokerage or investment accounts at all at E*Trade. If you do, your savings account stays there. Otherwise, customers with savings accounts will be summarily moved over.
It’s a win for customers, especially those who may have forgotten about the accounts or who were not staying on top of E*Trade’s diminishing interest rate.
My funds were moved out a long time ago due to their ever-falling rate, but there remained some unpaid interest that went into the account after my final transfer that amounted to about $0.70. Since I can’t transfer less than $1, it just sits there.
I received the letter only about 2 days ago, after having read about the transition over a week ago online.
That’s good to know and explains why I didn’t receive any notification. My company stock purchase plan is through E*TRADE, so I have a brokerage account with them.
I don’t deal with E*TRADE, but could this happen with Charles Schwab? I wouldn’t like it, but would deal with it if given sufficient notice.
I saw this news elsewhere and also found it odd, as I looked all over the Etrade site and didn’t see any notification– but I’m a brokerage and bank customer, so I guess that’s why…
I am happy they are moving me there, it saves me the hassle. Discover has a 3.75% CD rate right now. Since I dont need my money for 5 years, Im thinking of opening one.
I received no email, paper mail, or account update on E*Trade account. Today I was startled to see that someone had pulled all my money out of my account. I first assumed it was some sort of fraud on my account, and called E*Trade in a minor panic. The customer service rep informed me that they moved my money to a Discover Bank account. I called Discover, and they informed me I would have to call back tomorrow to get my new account details for an account that I will close immediately. Discover may have decent rates right now, but the whole thing has put such a bad taste in my mouth that I will take my money and find somewhere else to put it.
Thanks E*Trade.
I would call that breach of fiduciary duty.
I never got any information about this neither from Etrade nor from Discover. I never consented to a transfer of my assets. If I wouldn’t have missed 9,000 dollars I would have probably never recognized that funds are missing if the sum would have been much smaller. So how many customers who have multiple accounts and CD’s don’t even know that their money is missing. If you have an old address on file you might never get a notification and your assets are lost forever. There is no note, no nothing on their website or in your account overview that assets have been move. As far as I know a bank cannot move customer funds without consent. They gave up custody of funds as they cannot access those funds anymore.
I requested my funds back and they told me I have to take care about this on myself to get my assets back. I am close to hiring a lawyer to file a lawsuit after figuring out if they broke the law.
In case they broke the law then I will let you know, we can file a class action lawsuit is unheard of and outrageous. I called Discover Bank in the meantime and they told me they would call back, now 3 days later I still haven’t gotten a call and I have no idea on how to get my assets back.
I am done with this bank and closing all my accounts, same with Discover, who assisted Etrade in this scam.
So what comes next they move my money I have in CD to a commodities future traders without my knowledge and without my consent to gamble in the market?
While my accounts were not moved from ETrade Bank (I also have linked brokerage accounts), I did receive a letter that told me that my CDs would no longer renew automatically. The letter went on to say that as the CDs matured, they would just send me the money by mailing a check to the address of record. If you go to the ETrade Bank site, they no longer offer any CDs, and even the application form doesn’t have a CD option any more. This may cause me to pull the rest of my money from my ETrade brokerage accounts, since I may stop qualifying for preferred trading rates with fewer linked accounts. We’ll see.