As featured in The Wall Street Journal, Money Magazine, and more!
     

Pseudo-Savings Option: GE Interest Plus Account

This article was written by in Banking. 7 comments.


I received an email from a reader about the GE Interest Plus Account. This account functions like a savings account with limited check writing privileges, but there are some important differences to consider before you open an account.

The account offers high interest rates in tiers. For balances less than $15,000, you’ll earn 4.91%. For balances between $15,000 and $49,999, you’ll earn 5.17% APY. For balances of $50,000 and above, the account pays 5.43%. These rates handily beat ING Direct’s money market (savings) account and are competitive with HSBC Direct’s money market account.

While the GE Interest Plus account allows you to write checks, they must be in amounts of $250 or greater in order to avoid a fee. Also, this account is not a savings or a checking account. If you “deposit” money, you are actually investing in GE’s corporate debt. It’s high quality debt, rated AAA (the best) by Standard & Poor’s, but this account is not insured by the FDIC like bank accounts.

GE also holds the right to redeem the notes at any time; this means they may close your account and return the funds to you via check or other method.

This might not be a big deal to you, but you have to acknowledge that the investment carries more risk than a bank account. Before you invest, you have to ask yourself if the difference in APY and the limited check writing capabilities are worth that risk.

Also, you should read the investment’s prospectus before sending your money. Before I’d invest in GE’s debt, or for that matter, the debt of any company, I’d also read (or perhaps just skim) through the corporation’s SEC filings to make sure I’m not investing in a company whose practices I don’t agree with.

The minimum to open an account is $500 (or $250 if you enroll in an automatic investment program). Right now, GE is offering a $25 bonus for opening a new investment account.

Updated April 12, 2011 and originally published July 6, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,500
Rank: Platinum
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 7 comments… read them below or add one }

avatar kurt

That’s a fascinating way for a company to reduce their debt expense. It’s basically a money market account, complete with some of the restrictions on check writing (I bet most MM accounts hold a lot of short term GE paper). Accordingly, there is concentration risk here, so I would hope to make more from GE than from a standard money market account. However, I still think that a tax free money market account is still the way to go for those in high income tax brackets. For instance, the Vanguard Tax Exempt money market fund is currently yielding 3.64% after tax, or 5.43% pre-tax for those in the 33% tax bracket and 5.05% for those in the 28% tax bracket.

Reply to this comment

avatar kurt

And I was right, they do pay more than an average money market (which is good — you need to be compensated for credit concentration).

“Rates will always be greater than the most recent seven–day average yield (non-compounded) for taxable money market funds in the United States as published in Money Fund Report (TM) a service of iMoneyNet, Inc. (Formerly IBC’s Money Fund Report).”

Reply to this comment

avatar dong

Hmm, seems interesting, but I wonder how much of discount you might be getting in comparison to investing in GE Commercial Paper directly (not that most individuals would or should).

Reply to this comment

avatar tbrick

I have been with them since inception and find it to be a great place to invest. Always higher rates than C.D’s, and you can withdraw any amnt at any time. Sure there is some risk, but I havent lost a dime in over 20 years with them……

Reply to this comment

avatar Larry

Below are the rates advertised on GE Interest Plus website, am I missing something, the date is current on your article, but I don’t think they have ever paid those rates.

Investment
Amount Rate (%) Yield¹ (%)
Less than $15k 1.25 1.26
$15k – $49,999 1.35 1.36
$50k – $5MM* 1.45 1.46
Rates may be reset weekly.

Reply to this comment

avatar financialdave

Ya, those rates were from the end of Sept. 2007. I have been with them for 16 years and the rates have always been better than most other short term rates – Right now 9/14/11, is the lowest they have ever been @ 1.3% for >$50k

fd

Reply to this comment

avatar retail consumer

ge interest plus does pay higher interest. money is reasonably safe; they have been in business for decades without problems. they just changed respondent bank and are increasing fees and reducing services to increase their profitability at consumer detriment. they now charge for blank checks which they did not before. customer service is pretty bad but that is true for most banks as well

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: