Is Your Online Bank Giving You Their Best Savings Rate As Savings Rates Increase?
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Is Your Online Bank Giving You Their Best Savings Rate As Savings Rates Increase?

More than a decade ago, when GMAC Bank had just rebranded as Ally Bank, they ran a series of commercials designed to build the Ally brand around integrity of treating their customers equally, and not giving preferential treatment to new customers over existing customers.   I’ve only been able to find a handful of these commercials on YouTube, but there were many more than these:

 

 

The commercials were outstanding.   They set Ally apart as a bank that could be trusted to treat its customers fairly, and they also set a paradigm for the online banking industry which virtually all of Ally’s customers were forced to follow for more than a decade.

But, now as interest rates are increasing, some banks feel the need to attract new capital by offering new customers better rates than existing customers.   This practice enables them to keep their cost of capital lower as rates rise.  To be clear, it is perfectly legal to segment your market, but as Ally understood, it is just really bad business.

Here are four culprits who are at it already.

First, Flushing Savings Bank.   This bank has been in the online space for quite a while and it operates IGoBanking, BankPurely and GiftsforBanking.  The bank has a bit of a checkered history of moving rates around between the different banks in order to segment the brand (as does Emigrant Direct which does the same thing through the parent brands, MySavingsDirect and Dollar Savings Direct).   Segmenting the market with different brands, however, is at least transparent.   The IGoBanking and BankPurely brands have been increasing their rates, but the new rates are only available to new customers.  I personally had been a customer for many years through one of the brands and when rates started to rise, I reached out and asked them to extend the new rate to me, and was invited to haggle for something midway)   I obviously closed the account.

Second, Sallie Mae Bank.  This bank has been competitive over the years, and this year as rates have started to rise, they’ve rolled out a whole series of No Penalty rates through a third-party broker that are much higher than those available to existing customers.  I had been a customer for over a decade and when I asked them to make one of these products available to me, I received a curt email which made it clear that I was no longer valued as a customer.

Third, Goldman Sachs or Marcus or Goldman Sachs Marcus, or whatever they have decided to brand themselves this week, has been very competitive since the business was bought from GE Capital a few years ago, and always treated its customers very fairly.   However, as rates began to increase in 2022, they decided to be competitive only for those customers who are hawking the bank to their neighbors and social media acquaintances (i.e., you only get their most competitive rate if someone signs up with your referral code).   Those long-term customers who don’t have quite the following of a Kardashian are left out in the cold with an uncompetitive rate.  Not exactly the kind of loyalty that you would expect from a brand like Goldman Sachs.

Ally’s ads of a decade ago were right!   Banking is a people business and people expect to be treated fairly.   We are in a rising rate environment and there are banks that are desperate for your hard earned capital.  There is no reason to play gotcha and there is no reason to allow a bank that you’ve been loyal to for many years to give you anything but their best rate.

If that is happening to you, find a new bank here

Did you have an experience where you were extended a lower rate than a new customer?  Let us know below.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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