Closing E*Trade Bank Savings Account

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E*Trade Financial BuildingYou may have read on the interwebs that E*Trade is shutting down bank operations to focus more on the brokerage. As part of that process, all accounts are being sold to Discover Bank in what seems like the first bank sale that didn’t involve the FDIC. 🙂

Unfortunately for E*Trade and the hilarious E*Trade baby, taking away the bank account takes away their last differentiator. The savings account, despite it’s abysmal rates, acted as a higher than average interest rate sweep account for brokerage funds. It was an FDIC insured place you could keep your money between investments. The interest rate wasn’t that great, probably foreshadowing this sale, but it was better than getting nothing.

Update: It turns out that not all savings accounts will be transfered, just those without an ongoing brokerage relationship. Thanks to all the readers who shared that in the comments below, you can get more detailed coverage here.

So today I started the process of closing my E*Trade Complete Savings account. Fortunately, it was pretty easy and you can do it online:

  • Log in and look for Contact Us at the very bottom (or try clicking this link, not sure if it’ll work if you’re not logged in).
  • E*Trade Contact Form

  • From the account drop down, select your bank account.
  • From the Subject drop down, select Account Services.
  • From the Topic drop down, select Close Account.
  • Type in a message, this is the message I sent:

    I would like to close my Complete Savings account and have its assets transfered into my brokerage account.

About 24 hours later I received the following response (there was more text around the message but I trimmed all but the salient part):

Thank you for your message requesting to close your Complete Savings Account and moving it to your brokerage account XXXX-XXXX. I have submitted the request to have the account closed and the funds moved. The transfer of the money should occur tomorrow.

Then, after another 24 hours, I received a simple Account Closure Request Status message indicating the closure was complete. Easy as pie!

(Photo: thomashawk)

{ 15 comments, please add your thoughts now! }

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15 Responses to “Closing E*Trade Bank Savings Account”

  1. I had not heard that about ETrade Bank, although I must admit I do not have an account there.

    I do my saving and trading through ING Direct and their Sharebuilder software.

    In the past I have used Etrade (over 8 years ago), Ameritrade, and now Sharebuilder. While only being an occassional stock trader, they all seem about the same to me.

  2. Ken says:

    From what I read in the Chicago Tribune, ETrade is selling only accounts that have no ongoing brokerage relationship with the company. Of course, the 0.50% rate is pretty low so I can understand why many would want to close their accounts.

  3. Jim says:

    Ahhhh, I suppose I didn’t read closely enough… either way, it’s enough for me to close it even if only to simplify our finances.

  4. zapeta says:

    They closed my account a few months ago. I didn’t have any brokerage relationship with the company and my balance was zero so no big loss from them. I do miss the fast funds transfers, I used them as a go-between account for several other savings accounts since they were so fast.

  5. Tony says:

    Jim. You may have pulled the trigger a bit soon. I understand they are only closing savings accounts for customers with no brokerage account. I find it very practical to have a savings account within E-Trade so I can transfer funds immediately to my sweep account in case of a good trading oportunity.

    Like you said very well, this is their “last differentiator”. If they finally close my savings account I might start shopping for a new broker. Swchab and Fidelity are both offering no-fee ETF trades which is very appealing to me.

    • Jim says:

      Sounds like I may have… to be honest, I think I was just looking for an excuse. 🙂 0.50% APY is better than 0% APY … but not much better.

  6. PT says:

    Thanks for the heads up, Jim. I have a small bit of money with them as well. I wonder what prompted the move?? Must have been getting too many non-broker types, who just wanted online savings.

    • Jim says:

      I think all the banking related stuff was hurting them more than it was helping, lots of businesses sell off ancillary stuff to get back to core competencies. They’re getting crushed by all the low cost competitors and they’re in a bit of no man’s land – they’re not a great bank with a great interest rate and they’re not a great broker with great prices. They have an E*Trade baby… and…….. nothing else. 🙂

  7. I closed all of my E-trade accounts a few months ago and I have to agree, the process is really easy. I wish more companies would allow you to close accounts online and not having to call up customer service.

  8. Infinion says:

    If they were planning to close your account, you would have received an email and a snail mail about it being sold to Discover Bank already; a couple weeks ago. I’ve also heard they aren’t closing banking account for customers with a brokerage account. They also aren’t closing checking accounts. They told me they were closing all my savings accounts, but not my checking account, which is worthless at that point. Luckily, I was already in the process of moving to Ally.

    • Jim says:

      Yeah, I never received a letter but I assumed it was on the way… either way, it’s only a sign of things to come right?

  9. BrianC says:

    I don’t have an account there, but if I did I’d probably go ahead and close it unless it were my main bank. I tend to accumulate bank accounts from various sign-up bonuses, and while sometimes they prove useful, more often than not I end up with inactive accounts that should be closed anyway.

  10. Dirac says:

    They are dumping all checking account though. I was not keen on Discover so I am moving to HSBC as they already have my savings accounts. I guess this is a good thing. I was getting pretty spread out online with a variety of savings accounts, shifting to and fro attempting to get the maximum interest rate.

  11. Chris says:

    Closed…and moving on.

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