There’s a new player in the online banking space, ableBanking.com. Launched in June 2012, ableBanking offers high yield online money market accounts and certificates of deposit, with a twist. It operates an interesting business model that limits the amount spent on traditional marketing and gives the savings to depositors to donate to any cause or charity. When a consumer opens an account with ableBanking, he/she receives $25 to give to any charity. After that, the bank will donate 0.25% of your average balance every year on your ableAnniversary.
According to Heather Campion, a co-Founder and the Chief Administrative Officer at ableBanking, the average bank spends 15X more on marketing than it gives to charity and donates 1% of pre-tax earnings. By cutting back on traditional forms of advertising and providing that savings to consumers in the form of money that can be donated, ableBanking expects that it will give the equivalent of 2.5% of its assets to charity. She calculates this is over 10x what a regular bank will donate.
The bet here is that consumers, given money by ableBanking to donate to their favorite charities and causes, will create buzz about the bank on social networks and become a more effective means of getting the word out about the bank than traditional forms of advertising.
Rates and Fees
Heather told me that because ableBanking is online and doesn’t have the cost of a branch network to maintain, it can offer consumers high rates on money market accounts and CDs. The bank is currently offering a 0.85% APY money market account which is one of the best rates in the country. Its CD rates are also competitive with the top rates of other online banks. These are not teaser rates either. According to Heather, ableBanking plans to stay competitive as part of their business model.
The money market account and the CDs have a $1,000 minimum balance to open with no fees.
Details on Donating to Causes
ableBanking has some nice features for those who like to contribute to charity or would like to contribute more often. ableBanking provides the $25 to donate and also the .25% every year and an individual can give the funds to any 501c organization. That could include a religious institution, a homeless shelter, a school, or more. Their online banking interface makes giving easy, and also keeps track of all donations made, handy for tax-time. Within their online banking interface, a user can search for a 501c, specify how much money should be sent, and then send the cash much like sending a bill-payment. ableBanking has done the work of loading the names and addresses of every 501c organization in the country. The interface also allows a user to search for causes and charities in his or her neighborhood.
A benefit of using the interface to make donations is that, unlike paying via a credit card, which takes 2-3% of the funds sent, the funds a transfer through ableBanking is free.
Account Opening Process
Opening accounts is done online via an online application. Like most of the more sophisticated online banks, it confirms a users identity by pulling a series of questions from credit reports. So, for instance, a user might be asked the amount of his car payment or some other credit related question. The application takes about 10 minutes. Once the account has been setup, it can be attached to a primary checking account elsewhere so that can funds can be transferred in and out. The account can also be funded via check.
About the Bank
ableBanking is a division of Northeast Banking, an FDIC-insured community bank based in Maine and founded in 1892. Northeast Bank’s FDIC insurance covers deposits at ableBanking. The bank has over 200 employees and operates 10 branches in Maine as well as a call center, which is also utilized by ableBanking. Financially, Northeast Bank has a Texas Ratio of 9.6% versus the national average of 19.96% (lower is better). The bank has approximately $890 million in assets.
If you’re looking for a competitive online savings account or online CD, and also want to make giving easier, then ableBanking seems to worth checking out. We’ll continue to follow the new online bank as it develops and will post information regarding any new changes or announcements.