Bank5 Connect High Interest Savings Account Review
The Bank5 Connect High Interest Savings Account is an account designed to let you store money safely while still earning a return. Bank5 Connect aims to offer an easy to use, inexpensive, online banking service to its customers.
If you’re looking for an online savings account, this review will break down everything you need to know about the Bank5 Connect High Interest Savings Account.
Bank5 Connect High Interest Savings Account Pros & Cons
Solid Interest Rates for Savings Growth
Savings accounts were designed to accomplish two things. The first is to offer a safe place to keep your money. The second is to give savers a way to earn some return on their money.
Money at Bank5 Connect is completely safe thanks to insurance from the Federal Deposit Insurance Corporation. The FDIC lets you rest easy by insuring any balance you have at insured banks, up to $250,000 per account. If you put money in a Bank5 Connect savings account, you cannot lose money so long as your balance does not exceed $250,000. Even if the bank closes down, the FDIC will return the money to you.
There is, however, one way that your account can lose value in spite of the FDIC’s protection. The effects of inflation can cause the money in your account to become worthless over time.
How the Interest Rate Helps Fight Inflation
Inflation is the process by which money becomes worth less over time. Everyone’s heard the story of how a gallon of milk used to cost a dime and when children could buy penny candy. Those goods are more expensive today because inflation has made the dollar worth less.
Inflation is expressed as a percentage. If the inflation rate for the year is 3%, then at the end of the year, one dollar is worth 3% less than it was at the start of the year. While it might not sound like a big decrease in value, over the course of many years, it can have a big effect.
To help you fight inflation, banks offer interest on the money you deposit. That’s because you’re effectively making a
loan when you deposit money in a bank. The bank accepts your deposit, then uses your money to make loans to other customers. The bank charges more interest on its loans than it pays to its depositors. The difference in interest paid is used to keep the bank running.
Most national banks offer paltry interest rates, often as low as .01% per year. Online banks, like Bank5 Connect, cost less to run because they can centralize operations. They also don’t have to pay for physical branches and pay people to staff them. Online banks pass those savings on to you with better interest rates. Bank5 Connect offers an interest rate that is slightly lower than many online banks, but it beats the rates offered by physical banks by far.
Minimum Deposit and Monthly Fee
The Bank5 Connect High Interest savings account requires a minimum deposit of $10 to open. That makes it easy to start saving since most people will be able to come up with that amount of money. If you want to earn interest on the balance in your account, you’ll need to maintain a balance of $100.
Once you’ve opened your account, there is no minimum balance required to keep the account open. There’s also no monthly fee, no matter your account’s balance.
The main fee to watch out for with the Bank5 Connect High Interest Savings account is one that is shared by all online savings accounts. Federal law requires that online banks charge excessive transaction fees for online savings accounts.
You are allowed to make up to six transactions in the account per month. These transactions include withdrawals and transfers to other accounts. For every transaction you make in excess of the six allowed, you’ll pay a $10 fee.
All the fees charged by Bank5 Connect:
Bank5 Connect High Yield Savings Account Fees
|Monthly Maintenance Fee||$0|
|Excess pre-authorized withdrawals, transfers or checks||$10|
|Incoming wire transfer (domestic)||$0|
|Overdraft protection transfer||$0|
|Returned deposit item||$5.71|
If you also have a Bank5 Connect checking account, you can use your high interest savings account to provide overdraft protection. You can set up overdraft protection by calling Bank5 Connect and linking your accounts. Once the accounts have been linked, money will automatically be transferred from your savings account to your checking account if you would overdraft the checking account.
One thing to watch out for is that overdraft transfers do count towards the six transactions per statement period limit. If you use this feature regularly, you might pay a lot in excessive transaction fees.
Bank on the Go with Mobile Banking
Your Bank5 Connect High Interest Savings Account comes with free access to mobile banking. You can use the Bank5 Connect smartphone app to manage your account on the go. You can make mobile check deposits, transfer money or pay your bills from anywhere. You can also use the app to set up recurring transactions to just to check your balance before you make a purchase.
DIF Protection Keeps More of Your Money Safe
Bank5 Connect is based in Massachusetts, so it has access to the Depositors Insurance Fund. The DIF was created by the state of Massachusetts in 1934 to protect consumers from bank closures. While it originally served as an alternative to the FDIC, its modern role is to serve as an excess deposit insurer. The FDIC insures bank balances up to $250,000 per account. The DIF insures any amount above the $250,000 limit.
If you have a lot of money to deposit and you want to make absolutely sure that your savings are safe, the DIF provides that extra peace of mind. No depositor has ever lost a cent due to the closure of a bank with both FDIC and DIF insurance.
How Does It Compare?
If you want to open an online savings account but aren’t sure if Bank5 Connect is the right bank for you, consider these competitors:
Goldman Sachs Bank USA Online Savings
The Goldman Sachs Bank USA Online Savings account offers a highly competitive interest rate on all balances. You don’t have to worry about balance tiers that affect your interest rate.
There’s no minimum deposit to open the account and you can start earning interest right away. There’s also no monthly fees to worry about, so you can keep your money working for you.
You can make deposits to the account by wire transfer, direct deposit, or mobile check deposits. Where things get tricky is when it comes time to make a withdrawal. You’ll have to move the money to another account if you want to withdraw it. This won’t be an issue for people who keep their financial life entirely online. If you’re a heavy cash user, you might want to choose a different account.
Ally Bank Online Savings
Ally Bank is a well-known online bank that offers a full suite of financial services. Its savings account offers great interest rates with no minimum deposit and no monthly fees. Ally also doesn’t charge a fee for many common services such as cashier’s checks, making it a good choice for the frugal saver.
Because Ally offers a variety of financial services, this account is a good choice who wants to move all their financial accounts online and to have them in the same place.
Discover Online Savings
Discover Bank’s Online Savings account is designed to be easy to use.
You can deposit money to the account by sending a check in the mail, through your phone, by wire transfer, or through direct deposit. When you need to make a withdrawal, you can do so by phone or by withdrawing cash from an ATM.
There’s no minimum required to open the account. That makes it a good choice for people who are just starting out with saving.
The Final Verdict
The Bank5 Connect High Interest Savings account offers average interest rates for an online account. Its lack of fees and low minimum deposit requirement make it appealing to new savers, but many other online accounts offer similar deals. If you already have accounts at Bank5 Connect, opening a savings account isn’t a bad choice. Otherwise, the bank hasn’t done enough to differentiate its savings account from other, larger, online banks.