Online brokers are stepping up in a bid to grab customers amid a volatile market. Etrade is offering up to $500 cash for users who join its Power ETrade program.
To be eligible, you must first become a member of Power Etrade. To qualify, you must execut at least 30 stock or options trades per quarter. If you deposit $50,000+ at Etrade and do at least 30 trades per quarter, the price per trade is $9.99. So, to become a Power Etrade customer you have to plan on spending a minimum of $300. If you planned on doing a lot of trading anyway, this is no big deal. If you're a one stock a year kind of investor, this deal may not be for you.
So, assuming you become a Power Etrade customer, you then will receive the cash credit based on how much you deposit. The schedule is below:
Deposit Cash Credit
$250,000+ $500
$100,000 - $249,999 $250
$25,000 - $99,999 $100
$1,000 - $24,999 $1
I'm not even sure why they bothered with the lowest tier unless there was some regulatory requirement.
I noticed recently that AmTrust has significantly lowered its rates to the point that it has fallen off most of the rate tables. Then I received word of an email they were sending out. Now, it turns out they are being monitored by the OTS.
For awhile several years ago AmTrust was a leader in savings rates and in certain certificate of deposit terms. But recently, they have fallen off the charts. Two days ago, I was forwarded an email that one of our readers received from AmTrust providing them with an opportunity to redeem their CD. In essence AmTrust was doing a voluntary recall of some of its high yield deposits. It set off warning bells since this is generally not a normal bank business activity. The email read in part:
"A special offer for our AmTrust Direct customers: With the holiday season approaching, AmTrust Direct is offering a limited time opportunity to our customers. Until December 5, 2008, you can close your CD without an early withdrawal penalty."
Then today I saw an article on BankDeals that points out the bank received a cease and desist order from the Office of Thrift Supvervision. The order specifies that AmTrust must raise its capital ratios, not provide certain types of loans, limit golden parachutes, and also "shall not solicit deposits by offering interest rates more than 75 basis points over the local rates in the association's normal market area."
This explains AmTrusts's behavior. The bank is taking steps to comply with the OTS provisions and to raise its ratios and soundness. This includes calling back high yield certificates of deposit and lowering rates on new accounts. For the moment, AmTrust is done competing in the high yield arena, although many would argue it hasn't been a credible competitor for some time. Many customers were turned off by its 3 month bonus rates and the creation of new account types that paid high interest while leaving older accounts to earn less.
One has to wonder though if these actions will precipitate deposit withdrawals and impair its liquidity, the very thing the OTS is trying to prevent.
AmTrust is FDIC insured so if you have an account or money with them, you are covered up to $250,000 until December 31, 2009, at which point FDIC insurance drops back to $100,000 per account per person.
Etrade is offering $25 to open a Max-Rate Savings Account. The account currently pays 3.3% APY which is competitive.
Etrade is offering $25 to open a Max-Rate Savings Account. To get the $25 you only need to fund the account with $1. Payments are made within 30 days of account opening. The offer is good until December 12, 2008. As with these types of offers, if you already have an account with Etrade, you're out of luck. The bonus is for new customers and new money only.
The Etrade application is very easy and you can open it electronically and then fund it via their Quick Transfer capability. This is basically a simple process for requesting an ACH transacation to and from other financial institutions.
As a company, Etrade has experienced its share of problems. It's currently trading at $.85, down from a 52-week high of $6.00. It's forays into mortgages ended badly. Bauer Financial gives it two starts (poor) for safety and soundess. Deposits in Etrade are insured by the FDIC.
Online brokers are stepping up in a bid to grab customers amid a volatile market. TD Ameritrade recently came out with an offer of 30 days of free trades and $100 cash top open a brokerage account. Now, Etrade is offering up to $500 cash for users who join its Power ETrade program.