Emigrant Direct No Longer Allows 3rd Party Transfers

Thanks to everyone who let me know about this. I just confirmed with Emigrant Direct that as of about a week ago, they are no longer allowing you to make transfers between their savings account and other external accounts other than the “official” linked checking accounts. Some people are reporting that this only applies to withdrawals, and not deposits. Supposedly, they will be sending out letters about this. Um, why not send them out beforehand?!

This definitely hurts the flexibility of this account, but puts it in line with some other banks like E-Loan. Of course, the stated issue is “security”. But why can I still do these transfers with my other checking and savings accounts from huge banks like Bank of America, Washington Mutual, and Citibank? Anyways, please be warned if you have any transfers like Treasury Bill ladders scheduled.

Comments

  1. Compared to other high yield savings accounts, ED pays low interest and has low flexibility in transfers and adding linked accounts. Is it worth it to keep $1 in there anymore?

  2. What are “3rd Party Transfers”? I’ve been using EmigrantDirect for some time and have no problems whatsoever. I haven’t gone as far as setting up any T-Bill ladders yet, but will do so later this year.

    My only gripe is the APR. Emigrant is sticking to 4.93%, which isn’t low… but there’s better. Anyone have experience with the following?

    - iGOsavings.com (5.16% APR)
    - grandyielddirect.com (5.14% APR)

    My criteria for savings accounts is that it has a low minimum (if any) and Compounded Daily.

  3. 3rd party means anything other than the linked checking account where you send in a voided check or the initial account you funded with. Usually you just use the routing number and account numbers. Some people pay their credit cards with their Emigrant Direct account, or have it linked with PayPal.

    Picking an online savings account is all about what you need and feel comfortable with. See here for a Rate Chaser Calculator and other alternatives.

    Compounding interval actually means very very little. (Unless you are looking at $100,000 or more.)

  4. I guess I can see their point but I can pretty much link to any external account I want with GMAC. Always good to have a couple of these savings accounts around for this reason as well as moving to the account with the higher rate when those change. GMAC rates went back up a couple of weeks ago to 5.10 APY from 5.00 APY BTW. I had been pushing my weekly CofI from Treasuries to ED so these were all deposts on my part. Hard to give people money sometimes. ING has been pretty much a dead account since last spring’s higher rate which ended on 4/15. I keep a dollar there now in case they ever get competitive again.

  5. Before reading this I transfered some money to Applebank from ED
    will that be denied?

  6. This is based on a e-mails from readers and a conversation with Emigrant Direct on the phone. I haven’t actually experienced any failed transfers myself, nor have I made any in the last month. Hopefully others can help clarify.

  7. That’s funny. I had a 3rd party transfer (albeit a very large one) declined in late January! When I figured out that it was on ED’s end and questioned them, they told me that I would be getting one of these mystery mailers too. That was over a month ago, so don’t hold your breath. You should also know that they will not do wire transfers to accounts other than the ones you set up, either.

    Looking on this site, I see that last summer they did something similar when they changed account numbers without notifying anyone, so apparently this is just the way they do business. I funneled out all but 1c of my money, but they will have to offer a heck of a rate to entice me to use this account again…especially when I can’t trust them not to make changes without notification…

  8. I was told that you can transfer money in from any account (how convenient), but that you can only transfer out (ACH or wire) to one of the 4 checking (only) accounts that you set up. Any outgoing ACH transfers initiated by another institution will be rejected. I can confirm this for Pentagon Federal Credit Union and TDAmeritrade.

  9. I guess I don’t optimize quite as much as others out there, but this really isn’t a big deal to me. I “funnel” everything through my checking account anyway, and it sounds like that is unaffected.

    However, to each their own. And I certainly don’t like the “do first, explain later” policy ED seems to have towards customer service…

  10. Well, this is bad. If they’re going to reject transfers from TDAmeritrade, I guess I’m going to have to find a new savings account. Or once again launch on the Quest For The Very Best Bank In All The Land.

    ED accepted a transfer from TDAmeritrade for me as recently as March 23rd, so I guess it’s very recent indeed.

    Not happy.

  11. Independent George says:

    Ok, count me as pissed off.

    I just put $5,000 into a vanguard bond fund from my Emigrant savings account. The transaction appeared to go through just fine – I got a confirmation from Vanguard. But after reading this post, I checked my Emigrant account, and my money still hasn’t moved. No transaction. Now, I have to call Vanguard and find out what the heck is going to happen to my account, and whether or not I’ll be penalized for what is now a bogus transaction.

    Friggin’ bastards. If I get penalized, I’m asking for a refund. They had an obligation to inform us of any service changes.

  12. I just got off the phone with a rep named Lisa who said that that the inter-office notification took place last week, and that the new policy “should be on the website” in the account disclosure, along with some other new fees for outgoing wires, etc.

    Well, my account disclosure hasn’t been updated yet — it still states that external transfers (in and out) are allowed.

    The rep stated that I would be receiving a letter (which are going out “right now”), and that I would have 30 days from then on to change any direct debits I have set up.

    This is a big issue for me, since I have my student loans set up to direct debit from an Emigrant Direct account. I would be really really pissed if I lost my interest rate bonus because EmigrantDirect rejected the transfer.

  13. Of course this happens the first week I use ED in months…

    I have two T-bill purchases scheduled for Thursday that were auctioned today!!!!

    Anybody know if there’s any fee associated with a T-bill purchase not being able to go through for a reason like this?

    Thanks…

    ING’s actually startin’ to sound attractive as an alternative account despite the crappy interest

  14. This sucks! I guess they are trying to keep people from easily transferring funds to other higher-paying savings accounts. If only ED would pay a competitive rate, this would be a non-issue for most.

  15. Henry @ Binary Dollar says:

    so which online savings accounts allow 3rd party transfers?

  16. that’s y always have 2 savings accounts guys ;)

  17. Siggyboss says:

    Well, I have to two savings accounts because I don’t trust any bank. FDIC will bail you out, but in the meantime while burecrats figure out what to do you got nothing to live on.

    In addition, this is all about money which I totally respect. The lost of money due to scam transfers. The gain of money due to the difficulty of moving your money out of their bank.

  18. jpsfranks says:

    I just successfully pulled out of ED into a brokerage account on 3/28. I haven’t been tempted by rate chasing in the past, but I will be very disappointed and will probably bail on ED if this is true.

  19. HSBC Direct works fine right now. It also has a higher interest rate until April 30th.

  20. gattaca says:

    anyone know of a high APY bank that allows 3rd party transfers for credit cards?

  21. I have a concern about this too, but after thinking about it this is a savings account where you park money. They offer a competitive rate with exceptional customer service. Good luck all.

  22. Just spoke with an E.D. rep. He says they’re not accepting third party withdrawls OR CREDITS!

    This is disrespectful to customers and is unacceptable. They could offer 6% interest and my money won’t be going back there!

  23. That must be a mistake about the third party credits… they have direct deposit forms on their site.

  24. Independent George – That is exactly what happened to me, and that I posted on the Emigrant info page on this site on Mar 19th:

    http://www.mymoneyblog.com/archives/2005/08/emigrant_direct_2.html

    Good luck getting any satisfaction from ED. After getting the runaround from the phone support, I sent them an electronic message through their site, letting them know that I was withdrawing my money and letting you all know. Here’s the reponse I received (dated 3/20):

    Dear XXXXX, Thank you for contacting EmigrantDirect. We truly appreciate this opportunity to assist you. In order to ensure the most secure online banking service possible, EmigrantDirect no longer allows third party debits from your American Dream Savings Account. This account is a non-transaction account and can not be used as a ?Bill Pay? or an external funding account. Withdrawals from your savings account can be made by logging into your EmigrantDirect account and scheduling a transfer to your linked external checking account. I apologize for any inconvenience this has caused you. Sincerely, Francis

  25. Their account disclosures, as I read it, permits third party debit and credits.

    “Electronic Funds Transfer Information
    Types of Transfers: The following types of electronic funds transfers are available to you in connection with your American Dream Savings Account:

    Pre-authorized transfers arranged with EmigrantDirect, i.e., to and from your External Account. Please note, it may take between two (2) to four (4) business days, excluding Saturdays, Sundays and legal holidays, to complete a transfer between accounts.
    Transfers arranged with a third party that result in deposit or withdrawal of funds.”

    “Federal regulations require that no more than six (6) transfers per statement cycle may be made to (1) an account at another bank or financial institution, including your External Account, (2) to another EmigrantDirect account or (3) to a third party by means of a preauthorized or automatic electronic transfer. We reserve the right to close your Account for violation of the above restrictions.”

  26. I spoke with an E.D. representative this morning as well. She said they are only allowing direct deposit from your work.

    This definitely sucks though. My student loans are linked to my Emigrant account and it takes 30-45 days to process the change in accounts. It would have been nice if they would have let us know this was coming in a couple of months so people could plan for it rather than just implementing it immediately without telling anyone.

  27. This is definitely a pain — I have wanted to try and make it work with ED because of past good service and the generous way the responded to their customers (of which I was one) post-Katrina, but with their decreasing rate and bad policies, sadly, I think it may be time for this relationship to end. Anyone know of another good savings account that allows credit card / rent / student loan debits?

  28. Financista:

    I agree, ED has become a “pain.” I used the third party debits to fund Treasury Direct and a couple of monthly credit card payments, but now I’ll be phasing out ED.

    As for an alternative, you might consider GMAC Bank’s online MM, which allows third party debits (I pay another credit card bill there) and also facilitates check-writing. The usual rule applies; no more than six withdrawals a month, but I’ve had excellent results using GMAC as a checking/savings account.

    Finally, I telephoned HSBC this evening and was advised by a representative that third party debits are allowed by the online savings account. So, I started the process of opening an HSBC account.

    BTW, I’m not a spendthrift; all of my credit cards are cash-back cards, and I always pay off the full monthly balance.

    Thanks, Jonathan, for the heads-up.

  29. FYI – I e-mailed Treasury Direct just to check. Fortunately, they don’t impose any sort of penalty for transactions that don’t go through.

  30. Does anyone know if Regulation D applies to brokerage accounts?

    For example, Sharebuilder.com has a respectable but not astonishing sweep of 4.48%. They accept 3rd party deposits (because the encouraged me to have my tax return direct deposited to my brokerage account) although I’ve not experimented with 3rd party debits.

    Their money market does not seem to be FDIC insured like the MMs you find at most banks, so perhaps Federal Reserve rules don’t necessarily apply. I don’t remember seeing a limit in any of the account agreements.

  31. Jason D says:

    I just pulled money from ED to WTDirect last week and it worked fine. It must have been just before the change. I spoke with a rep at WTDirect, and they confirmed that third party transfers are allowed (in and out).

  32. weird. I was able to get a treasury direct deposit and withdrawl on 4/5/07 at emigrant. Though i just found out about this information and i already initiated another deposit from a different brokerage account to ED on 4/4. Not sure if that will go through. I didn’t receive any emails about policy changes though.

  33. Same here. My Treasury Direct withdrawl and deposit went thru on 4/5/07. However, I am going thru the steps to open a new savings account that allows 3rd party debit.

  34. Yep, the transaction slid for me too. Phew! Now I’ll just push the rest of my money out of there, throw away the cheap hat they gave me, and forget anything called “Emigrant Direct” ever existed, lol!

  35. Hey, I like that hat!

  36. pull money out of ED fine for me on 04/09/07.

  37. Well, I just found out about this the hard way… the wife and I set up Vanguard IRAs last Monday to max out the 2006 contributions and just found out today that Emigrant denied the transfer. This means the 2006 contributions are null because the government’s grace period has already passed. As you can imagine, I. Am. Pissed. I spoke with a supervisor at ED and told them that I will not tolerate this kind of underhanded business practice. She assured me that letters explaining the policy change will be mailed sometime next month. What idiots. As for now, I’m off to shop around for a new savings bank. Our money is being removed from the account at midnight.

    Anyone know of anyway to contact the IRS to plead my case about the 2006 contribution???

  38. Kyle – I had the exact same thing happen to me. I called Vanguard and they said that the issue was a bad routing number. I told them that the routing number was correct, and they were about to fund my 2006 Roth, BUT they then told me that April 24th was the last day to do any transfers! I am just as pissed. This is like losing out on $3,000.

    I think I will be switching to WaMu as Jonathan did. If you hear anything about getting a 2006 contribution, let me know!

  39. Wow, they are STILL working on that letter?! I was promised one in mid-March. Jonathan was promised one when he posted this on 4/2. And now Kyle’s got a ballpark of sometime in May. Has anyone actually received such a letter?

  40. Nope, no letter for me. Really sorry to hear about people’s IRA experiences. I tried to give everyone a heads up :(

  41. Thank you for posting this. My direct deposits were not posting to my ED account and I had no idea what was wrong. I can’t believe that they won’t allow direct deposits from a payroll account!

  42. Does anyone know what back-end service provider Emigrant uses for ACH transfers? Is it CashEdge?

  43. I just ran across this thread. Interestingly enough, ED still allows me to make 3rd party withdraws. I usually have three 3rd party w/ds per month. My most recent was mid Aug. Is it because I have a large balance? I have over 20k. Or is it that I have direct deposit?

  44. Dollar Savings and Emigrant Direct have no problem with a Discover Card pull every month.

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