E*Trade Bank Provides Checking Accounts and Convenient Loans
ETrade is widely known for its funny commercials, which advertise the broker’s low-cost investment services. What is not well known is that ETrade is part of ETrade Financial Corporation, a holding company that also operates ETrade Bank. The banking unit of E*Trade has FDIC insurance plus some nice benefits that may not be available at traditional banks.
There are two checking accounts at ETrade. The basic checking package is simply called ETrade Checking, while the premium version is the Max-Rate Checking account. Both accounts have a $100 minimum opening deposit requirement, and each account comes with bill pay and a Visa debit card free of charge.
The first order of checks is free for either account, while the bank charges $8.75 for additional check orders. The fee is waived for customers who have $50,000 in total ETrade assets, or who place 30 or more stock trades per quarter in an ETrade brokerage account. The bank will also waive the charge for customers who have a checking account balance of at least $5,000.
ETrade offers both account holders user-friendly technology to make funds transfers or perform other banking transactions. The ETrade website has a lot of helpful features, such as a tax center, storage of account documents in Excel and pdf formats, and a searchable transaction history. The mobile app has a convenient check deposit feature.
The ETrade Checking account earns no interest. In return, the bank charges no monthly account fee; and there is no minimum balance requirement, either. The Max-Rate Checking account does pay interest, but it carries a $15 monthly fee. This charge can be avoided by maintaining a $5,000 account balance or receiving a direct deposit of at least $200. Another method to eliminate the monthly charge is to keep at least $50,000 on deposit with ETrade Financial Corporation. This includes both banking and brokerage divisions plus employee stock plan accounts. E*Trade will also waive the fee for customers who place 10 option or equity trades per month in a securities account.
Given that Max-Rate Checking has a monthly fee, why would you prefer this account over its basic cousin? The reason is that the Max-Rate account comes with unlimited refunds of ATM charges, while the entry-level account does not. ETrade itself charges no ATM fees, but owners of cash machines usually do. ETrade refunds these fees for Max-Rate clients when they ATM’s inside the United States. The company does not reimburse ATM fees that are incurred outside the U.S. ETrade also imposes a 1% surcharge on all foreign currency transactions. This policy applies to both ETrade Checking and Max-Rate clients.
Unfortunately, ETrade does not offer savings accounts anymore, and its money market deposit account cannot be opened by new customers. The same is true of ETrade’s CD’s. The financial conglomerate does, however, offer a convenient line of credit through ETrade Bank with investments in an ETrade securities account serving as collateral.
The line of credit requires at least $200,000 in collateral, and a maximum of 50% of the brokerage account’s eligible investments can be borrowed. Option contracts are not eligible securities, nor are investments purchased on margin. Because the service is a line of credit and not an immediate loan, the eligible loan amount will change with time as the value of securities in the brokerage account fluctuates.
The line of credit isn’t margin because E*Trade doesn’t allow the line of credit to be used for investment purposes. It could be used for many other reasons, such as the purchase of a home, education financing, or business costs.
ETrade provides a simple on-line application for the line of credit and promises to reach a decision in a less than a week. Once approved, requests for funds can also be submitted on-line, and it takes no more than two business days for ETrade to fulfill the request.