The New York Times had an article about MoneyAisle.com, a new website in which “banks bid in live auctions for your business.” The site offers to find you the best rates on Certificate of Deposits (CDs) and high yield savings accounts based on the amount you can deposit and your geographic area (state, zip), and the duration in the case of CDs.
Certificates of Deposit
For CDs, you enter in your deposit amount, CD duration, state of residence, and zip code (optional). Oddly enough, they can’t offer CDs in the District of Columbia, Georgia, Hawaii, Idaho, Maine, Mississippi, North Carolina, Ohio, Vermont, West Virginia, or Wyoming. Everyone else is available. There are also advanced options to remove or add excluded banks.
I entered a deposit amount of $1,000 for 12 months in the Great State of Maryland and watched as the screen showed 89 banks bidding in round one drop all the way down to 4 in round 2. By round 6 only 3 remained and by the 8th round only 2 were left. Those two clawed and fought until the 12st round when one bowed out. In total, 109 bids were submitted from 89 banks and the winner was…
UmbrellaBank.com! (They offered a 4.10% APY 12-month CD, which is worse than seven other banks on my list of best CD rates)
Never heard of you! But that’s OK, after the bidding screen the site shows you a wealth of information.This information includes their address, website, year founded, FDIC number (all banks are Member FDIC), total assets, number of branches, customer service contact information, and a brief description of the bank. UmbrellaBank is the internet banking division of New South Federal Savings Bank, a bank with one branch in Birmingham, AL.
I now have 29 minutes before the offer expires, but I’ll politely decline because ING Direct offers a 12-month 4.25% APY CD and I already have an account open there.
Increasing the deposit amount changes the offers? As you might expect, the more you offer to deposit, the better the rates. When I upped the deposit amount to $10,000, I was offered an E-LOAN CD at 4.35% APY but that’s in part because E-LOAN CD’s have a minimum deposit amount of $10,000. Increasing the deposit amount to $50,000 had no effect but I expected pumping it up to $100,000, which is Jumbo CD territory, would have an effect. It didn’t, E-LOAN still was the top offcer at 4.35% APY.
High Yield Savings Accounts
The high yield savings account bidding was more subdued with fewer banks (66) vying for your business with less fanfare. All you provided was how much you could deposit and your state of residence (zip optional) and the banked duked it out in the very same manner as with CDs. Remember one important distinction between savings accounts and CDs – savings account rates are variable, CDs are fixed. You could sign up for an awesome rate today and the bank could lower it tomorrow.
Results of the auction for a $10,000 deposit amount for the Great State of Maryland was a 3.63% APY rate from Community National Bank, a bank located in Morristown, TN. Much like the CD screen, all of the bank’s information from founding year to customer service contact information is made available. The offer is pretty good though as it tops many of the best online banks (current leader is FNBO Direct with a 3.50% APY high yield savings account now that WaMu is kaput).
Increasing the deposit amount changes the offers? I increased my deposit amount to $100,000 and Community National Bank’s rate increased to 3.80% APY (they still won though). I looked on their website to see why and it appears that their savings account offers tiered rates based on the account balance.
Live Auctions? Really?
You might be thinking that there’s a bank person happily bidding away behind the scenes but there isn’t, it’s probably a computer setup with auction rules and bidding rules marrying up the bids to give you the highest rate it can. All the site asks for is deposit amount, deposit duration, and your geographic location – there’s no need for human intervention. Of course, whether a person is involved is entirely irrelevant but it does play into the “suspense” aspect as the number of banks left to bid ticks down. Save me some time MoneyAisle and just give me the rates.
The live auction bit is a little gimmicky but it is in the spirit of LendingTree (though far faster and without as many phone calls and emails!) and it does a fairly good job of identifying deals for the average consumer. I think the savvier saver who is up to date on rates can find a better deal on their own but this isn’t a bad place to start.