Think Only the Rich Have Accounts at Goldman Sachs? Think Again

You’re probably familiar with Goldman Sachs, at some level. The multinational banking firm, best known for investment banking, goes all the way back to 1869. But did you know that they also have a web-based arm known as Goldman Sachs Bank USA, or simply GS Bank?

It’s an online bank that pays far higher rates of interest on savings and certificates of deposit than traditional banks, and it competes favorably head-to-head with other well-known online banks. As an example, Ally Bank currently pays an APY of 2.25% on its 60 month certificate of deposit (CD). GS Bank, on the other hand, pays a 2.25% APY on its CD of the same term. (rates as of June 2017)

They may not be the highest paying bank in the market across the board, but they will usually lead the pack on one or more offerings. Let’s learn more about this online division and what they are offering.

About GS Bank

GS bank specializes in online savings accounts and certificates of deposit. They offer high yielding savings instruments with no transaction fees, and FDIC insurance of up to $250,000 per depositor.

Their specialty is working with the small business market. They provide smaller companies with access to relevant education, capital, and business support. In fact, their stated purpose is “unlocking growth and job creation potential of small businesses.”

GS Bank provides the services that you would expect from an online bank. You can check balances, track transactions and deposits, and receive monthly statements electronically. You can also transfer money between linked accounts, as well as make scheduled transfers at your own discretion.

How GS Bank Works

GS Bank uses a four-step process to open an account, and you can do it entirely online. Completing the process takes under 10 minutes. Want to see how easy it is?

• Select a savings account or certificate of deposit
• Enter ownership information
• Review and sign your application
• Transfer money to your account from outside accounts

For security purposes, you’ll need to create a username, password, and security challenge questions. GS Bank will then issue you a four-digit banking PIN so that you can access your account.

Trial deposits will be used when you open your account. GS Bank will make two very small (just a few cents’ worth) into your external bank account. You will then verify that those transfers have been received in your external bank account, as well as confirm the amount of each transfer. Once that has been completed, you will be able to make actual transfers between your GS Bank account and your external bank accounts.

You can transfer funds into your new account via electronic transfer, wire transfer, or check deposit. You can also set up direct deposits from either your paycheck or your monthly Social Security check.

GS Bank allows you to link as many as four external accounts, and you can then make transfers anytime, night or day. You’ll begin earning interest on your savings account or CD the very same day that a deposit is posted to the account.

Bank Highlights

GS Bank provides the full range of services that you would want, and expect, from an online bank. These include:

Minimum initial deposit requirement. There is no minimum deposit required to open a savings account. You must make a deposit into the account within 60 days of opening it, but that’s it. For CDs, the minimum requirement is just $500. This makes GS Bank a natural choice for both new and small savers.

Types of accounts offered. Individual or joint accounts only. GS Bank does not offer custodial or trust accounts, nor do they offer IRAs.

Deposit limits. The maximum amount of money you can have on deposit for all individual accounts is limited to $250,000 (combined) per account owner. This includes interest earned and credited but not withdrawn. For joint accounts, the combined maximum is $500,000, which includes interest earned and credited but not withdrawn.

Interest calculated using the daily balance method. Your interest earned begins to accumulate on the very first day you deposit money into your savings account or CD. They apply a daily periodic rate on your account balance, and it is calculated based on either 365 or 366 days. On savings accounts, interest is compounded daily, but is paid into your account on a monthly basis.

Fees. There are no fees charged in connection with your online banking accounts. That includes no fees for wire transfers.

Customer Service. GS Bank customer service is available Monday through Friday, from 7:00 AM to 11:00 PM Central time. Customer service can be reached by phone, email, or snail mail. I called the 800 number to get information and was connected to a live person within 2-3 minutes.

Availability of funds. For electronic and wire transfers, deposits are immediately available if they are made before 5 PM Central on regular business days. A deposit made after 5 PM will be considered effective the following business day. For check deposits, funds will be available on the first business day after the bank receives the deposit.

Limits on funds withdrawal. There is a limit of six withdrawals per statement cycle, which is typical with true savings instruments at all banks. (This is what distinguishes them from checking accounts.) Funds can be withdrawn from your account by wire transfer or electronic transfer, and you can also make transfers on weekends and holidays. There is a per-transfer limit of $125,000 when the transfer is done online.

Account protection. All accounts are fully protected by FDIC insurance, for up to $250,000 per depositor. Joint accounts are protected for up to $500,000 ($250,000 per depositor).

Certificates of Deposit

GS Bank’s CDs offer some of the most aggressive interest rates available. You can open one for as little as $500, with terms that run from six months to six years.

The 10-day CD Rate Guarantee. When you open a new CD with GS Bank, you will get the highest interest rate the bank offers within the first 10 days of purchasing the CD. Your CD must be funded within that 10 day period.

What does this mean? Say you hypothetically open a CD (day one) while they are offering a 1.0% APY. Then, 4 days later, the interest rate they are offering jumps up to 1.05%. As long as you fund the CD before day 10, you’ll be given the higher interest rate of 1.05% (even though the rate you signed up for was only 1.0%).

Bank Limitations

There are a few services that GS Bank doesn’t offer, at least not at this time. They include:

No ATM/debit card. You can access the funds in your account by electronic transfer to your account at another bank or by wire transfer. But at this point in time, GS Bank does not offer an ATM/debit card. That may not be a deal breaker, however. The primary purpose of either a savings account or a CD is to earn high interest on your deposits. The accounts are not designed to serve as a typical on-demand deposit accounts, so this may not bother you at all.

Limited account types. Right now, GS Bank doesn’t offer either custodial accounts or trust accounts.

No international transfers. At least for the time being, you won’t be able to transfer of funds to and from accounts outside of the US. However since Goldman Sachs is a multinational bank, we can reasonably expect this feature to be provided at some point in the future.

No IRA accounts. GS Bank does not provide IRA accounts, as of October 2016.

Is GS Bank the Right Online Bank for You?

Most banks today pay something close to nothing – often less than 0.10% year – on savings accounts, CDs, and money market funds. This is why you need a relationship with a bank like GS Bank, in order to hold the majority of your savings. Even if you have great features elsewhere, such as award-winning checking accounts and credit cards, you still need a strong bank that pays high interest rates to hold your savings instruments.

So, what about other online banks that also pay high interest? One major advantage that GS Bank has is that they are backed by one of the most respected financial institutions in the world: Goldman Sachs. Not only should that make your investments more secure, but it also holds the promise of expanded features and opportunities in the future. The kind that only a world-class banking organization could provide.

To get more information, check out the GS Bank website, where you’re certain to find savings opportunities that will interest you.

Have you signed up for a GS Bank account yet? What has been your experience?