Through the ever changing banking dynamics, everything is for sale. This includes bank accounts, especially to those companies who are not necessarily in the banking business. E*Trade, known as a discount brokerage firm, has a banking division which at points in recent history helped the company stay afloat. However, in a further effort to commodify, well, everything, some accounts were sold. Those online savings accounts that were not tied to brokerage accounts were sold to Discover Bank.The actual transfer of assets occurred on March 7, 2010.
While this is not a major set back by any means, it serves as a great example of the disloyalty of banks to current consumers. Granted, at the time of the sale the savings interest rate for E*Trade was 0.51% APY and Discover is now 1.34% APY, so consumers won in a certain regard…and we all need to savor small victories.
The deposit sale is "in keeping with the strategy of reducing the bank's balance sheet and, therefore, the capital required to support the bank," Bob Druskin, E*Trade Chairman and interim Chief Executive, said during a conference call last month.
This does allow Discover to grow its deposit base, but it poses small challenges to consumers. One of which is the new minimum deposit that Discover Bank allows through its automatic savings plan. E*Trade allowed for as little as a dollar to be transferred from a checking account to their online savings account, Discover has a minimum of $25.
Fortunately, in this case, the consumer “won” by getting a higher rate, but that may not always be the case. As internet savings rates are quietly still declining (see ING at 1.1%), one will question how long this medium will continue to thrive and we will revert back to local banks…maybe even with passbook accounts!
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