E*Trade to Move Banking Customers to Discover Bank
Tip It!This is just a quick note to say that I recently received a letter from E*Trade Bank saying that they’re moving my account to Discover Bank. According to the letter:
“We are writing to let you know that your E*Trade Bank account referenced above will soon be transferred to Discover Bank, and become a Discover Online Savings Account. This follows our plan to focus more exclusively on providing optimal investing solutions to our customers. We expect this transfer to occur on or about March 7, 2010.”
Apparently slashing their savings account interest rate to 0.5% APY last fall wasn’t enough to drive away all of their customers, so they’re selling their banking operations to Discover Bank.
(We have an account with E*Trade Bank, but it’s currently empty.)
If you have an E*Trade Bank account, here’s what you need to know:
- You’ll still be able to access your account for the time being.
- Seven days prior to the transition, they will no longer allow Quick Transfers from outside of E*Trade Bank.
- Any checks deposits have to be made at least seven days prior to the transition.
- Direct deposits will be accepted until March 5, 2010. After that date, they will be returned to the sending institution.
- Past statements and tax documents will remain available from etrade.com after the transition, but your account history will not be transferred.
You should receive a welcome letter from Discover Bank approximately five days before the transition with your new account details. The good news in all of this is that Discover Bank is paying nearly twice as much, at 1.35% APY.
Update: I’ve seen statements in the news that this doesn’t apply if your E*Trade Bank savings account is linked to an “active” brokerage account.
Published on February 16th, 2010 - 5 Comments
Filed under: Banking
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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5 Responses to “E*Trade to Move Banking Customers to Discover Bank”
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February 16th, 2010 at 8:28 pm
I don’t have any experience with Discover Bank but I use their credit card and I’m more than happy w/ them. They have one of the best UIs I’ve seen and they’ve been helpful when needed.
I wouldn’t be upset if you’re being switched over from E-trade.
Austin @ Foreigner’s Finances
February 17th, 2010 at 8:43 am
Are you sure it’s everyone with an account or just those with zero balances for an extended period of time? I have an account and have seen nothing to indicate this move.
February 17th, 2010 at 9:00 am
Rob: Great question. I dug a bit deeper and it appears that this doesn’t apply to customers whose account is linked to an “active” brokerage account. Updated above. Thanks!
March 1st, 2010 at 7:58 am
I have a Money Market Account with E*trade since many years. All of a sudden and for no reason whatsoever E*Trade has frozen my account. I cannot transfer money into it, nor out of it. E*Trade refuses to honor my credit card bills and sends me overdraft notices for a check of $100 when the account balance is $108,000.- and; according to them, the available balance is $34,000. I don’t know why the difference is not available. Nobody can explain what is going on. Customer representatives are unable to explain. Supervisors or case managers never call back. Even Pam Erickson, Corporate communications officer, and Gregory Framke, Executive Vice President and Chief Operations Officer, do not reply to faxes or emails.
I have to hope my account will be transfered to Discover Bank, but have received no letter saying so. Is my only way out of this a lawsuit?
March 18th, 2010 at 11:07 pm
I would call that breach of fiduciary duty. As far as I know a bank cannot move customer funds without consent. They gave up custody of funds as they cannot access those funds anymore.
I requested my funds back and they told me I have to take care about this on my self to get my assets back. I am close to hiring a lawyer to file a lawsuit after figuring out if they broke the law.
I am done with this bank and closing all my accounts, same with Discover, how assisted Etrade in this scam.