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E*TRADE Bank Moving Customers to Discover Bank

This article was written by in Banking. 9 comments.

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 does not list savings rates on their website currently while Discover Bank Online Savings is offering 0.80% APY as of October 8, 2013. This increase in interest rate would easily cover one day’s lost interest income due to funds in transit from one bank to another.

Banking Deal: Earn 1.85% APY on an FDIC-insured money market account at CIT Bank.

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.

E*TRADE Discover Bank

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.

Updated January 12, 2018 and originally published February 19, 2010.

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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 .

{ 9 comments… read them below or add one }

avatar 1 Anonymous

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.

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avatar 2 Luke Landes

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.

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avatar 3 Anonymous

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.

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avatar 4 Anonymous

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…

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avatar 5 Anonymous

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.

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avatar 6 Anonymous

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.

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avatar 7 Anonymous

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?

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avatar 8 Anonymous

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.

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avatar 9 Anonymous

My 89 yr old mother had her check book stolen. This checkbook was left with my daughter, at her appartment who was told if ever she had an emergancy, not to worry she could write a check.
There were occassions when my daughter was forced to do so.
My daughters ex boyfriend stole the checkbook and cashed checks totalling almost $1800.
Those checks were identified as forgeries and reported to E Trade Bank( the bank investigator handling the case agreed…these were obvious forgeries). He instructed how to proceed, affidavit,police report,etc. All his requests were immediately met.
In regard to the police, my mother was told that each one of the forged checks would count as a seperate fellony against this young man. Also “We are in Florida and now he is in N.J” what would you want police to do?” My 89 yr old mother told them OK I guess you are right. I am a joint owner on this account and when I heard what had happened I was furious!
I contacted the detective who was handling the complaint and she tried to diswade me from going foward, even giving me incorrect information as to where the checks were cashed.
I wrote to the young man’s parents in N.J. demanding they make restitution but got only a threatening phone call back from the young man.
I demanded E Trade make good on these forged checks! After months they answered, “We have decided your Mother was wrong to have left the checkbook at her granddaughter’s appartment and it’s her falt it was stolen”. Next I complained to the Bank regulartory commission who answered “We cannot help you and infact we are in the process of being closed down”. Anyone have any suggestions for me? Even Small claims court here in FL would cost several hundred dollars. I sent all this information to the Treasury Dept. and I am waiting to hear back. E Trade in all their advertising for bank customers enfisises how they will protect customers against fraud but if you ask me…I have never had more trouble with other any bank before!

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