- Bargaineering - http://www.bargaineering.com/articles -
Online Banks Are Healthy, Growing, & 100% Safe
Posted By Jim On 11/09/2009 @ 5:16 pm In Banking | 42 Comments
So far, 145 banks and thrifts have been closed by regulators since the start of the credit crisis in 2008. One hundred a forty five.  Every Friday, when the FDIC usually announces closures, for the last two years, we’ve expected at least one bank to fail… sometimes two. Last week, five banks failed, bringing the 2009 total to 120.
So you might be surprised to learn that not a single one of those failures was an online bank. In fact, the last time an online bank failed was back in 2007 when NetBank of Alpharetta, GA was closed . It was acquired by another online bank, ING Direct . Many people would have you think that your money is safer earning 0% at your local bank than 2% at an online bank.
So let’s change the pace of the discussion a little more, let’s talk about some good news. Everbank , one of the online banks I follow, recently announced that they acquired Tygris Commercial Finance Group , a commercial finance and leasing company. It will give them hundreds of millions of dollars of capital to grow their bank. They offer high interest rates on their savings accounts not because they need deposits to stave off failure, they offer high interest rates because they run a lean operation and can pass along those savings to customers. All online banks do this.
As an aside, Everbank is one of the most interesting of the online banks because they offer so many products other banks don’t. One prime example? MarketSafe FOREX Certificate of Deposits . No other bank I know of offers something like that. Does that make it a good investment? Not necessarily, but the option is there.
All of the online banks I ever write about on Bargaineering are FDIC insured up to $250,000. The FDIC insurance program protects your money so that even if the banks were to fail, you’re protected. If it’s protected by the government, why not go with the best interest rates available?
Other banks, especially brick and mortar ones who can’t compete, and mainstream media, who rely on fear to sell news, would have you believe that online banks are dangerous. They point to the 5% APY CDs once offered by Washington Mutual , saying high yields are a sign that a bank is going under.
It’s false. The reality is that online banks are stronger than ever, expanding and growing, and perfectly safe. Don’t believe the hype.
(Photo: corrieb )
Article printed from Bargaineering: http://www.bargaineering.com/articles
URL to article: http://www.bargaineering.com/articles/online-banks-are-healthy-growing-100-safe.html
URLs in this post:
 Tweet: http://twitter.com/share
 Email: mailto:?subject=http://www.bargaineering.com/articles/online-banks-are-healthy-growing-100-safe.html
 One hundred a forty five.: http://www.fdic.gov/bank/individual/failed/banklist.html
 NetBank of Alpharetta, GA was closed: http://www.fdic.gov/bank/individual/failed/Netbank.html
 ING Direct: http://www.bargaineering.com/articles/r/ingdirect.php?tag=banksHealthy
 Everbank: http://www.bargaineering.com/articles/r/everbank.php?tag=banksHealthy
 acquired Tygris Commercial Finance Group: http://www.everbank.com/004Press20091023.aspx?referID=12718
 MarketSafe FOREX Certificate of Deposits: http://www.bargaineering.com/articles/foreign-exchange-forex-currency-cds.html
 high yield savings account rates: http://www.bargaineering.com/articles/high-yield-savings-accounts-rates.html
 5% APY CDs once offered by Washington Mutual: http://www.bargaineering.com/articles/wamu-cd-rate-update-500-apy-12-month-cd.html
 corrieb: http://www.flickr.com/photos/corrieb/519933499/sizes/m/
Thank you for reading!