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E*Trade Bank Review

My first concrete memory of E*Trade was during a half-time commercial from a Super Bowl many years ago. The commercial was that of a monkey dancing for about twenty seconds followed by a single line flashed across the screen, “Well, we just wasted 2 million bucks. What are you doing with your money?”

Back then they were primarily a discount brokerage that offered extremely cheap trades compared to full service brokers. Since then, they’ve expanded into banking and now offer one of the most competitive interest rates available in a high yield savings account [3].

E*Trade Bank Account

The online interface is very quick and intuitive. It seems as though the experience they’ve had running a brokerage website has come in handy for the banking, as banking services are often simpler and quicker than brokerage services.

E*Trade offers online bill pay – a feature you don’t often see in savings accounts. I haven’t enrolled but I can’t imagine it works any differently than any other bill pay service. Online bill pay is a great way to reduce hassle in your life (and saves you on postage!) and I use it extensively through my regular checking account. If you could move all your bill payments to this savings account, you could maximize your interest earnings on those funds.

What’s nice about E*Trade, which puts them in the ease of use category of ING Direct [4], is that it’s a cinch to open up new accounts. While you don’t get the full versatility of ING Direct, where you can open up any number of savings accounts, it’s a lot easier to open up a CD or brokerage account than at a bank like HSBC Direct [5]. What’s also nice, and standard amongst online banks, is that transfers between accounts is instantaneous (unless there is a bank holiday).

Another great feature of E*Trade is that you can link multiple online banks together electronically. Many other banks offer this but from time to time you’ll get one that will require you to send in paperwork and a voided check (Emigrant Direct and Dollar Savings Direct require this).

E*Trade Brokerage Account

One of the greatest features about E*Trade Bank is that it’s so easy to link up a E*Trade Brokerage account. The brokerage side of E*Trade is pretty good, having won several awards in the last few years. In 2008, they were named Smart Money’s best discount broker [6] for the second year in a row and Top 10 by Barron’s online broker survey. More importantly, they didn’t score poorly in any of the categories listed.

You can buy bonds, mutual funds, stocks, options, basically anything you could want through the brokerage account. The only complaint I have is that E*Trade doesn’t give you real time quotes on the buy screen, it gives you delayed quotes. It’s 2008, I can’t imagine real time quotes are all that more considering you can get them for free anywhere. I’m not a hardcore trader, though I did day-trade AIG [7] earlier this year, but I’m overall happy with E*Trade.

If you’re looking for only a brokerage account, I think you would do just as well with someone like TradeKing [8] – cheaper trades ($4.95 vs. $9.99), just as many accolades (my TradeKing review [9]). However, coupling the bank and the brokerage together makes E*Trade a solid choice if you’re looking for both.

That Super-Bowl Commercial

And, thanks to the power of the internet, you can watch that commercial on YouTube!