My Cash Transfer Hub: E-Trade Complete Savings Account

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If you have your cash spread out across several bank accounts, whether it’s to help with chasing higher interest rates, paranoia, or saving for different goals, it can become quite a hassle to transfer money between accounts. I get asked all the time about how I juggle them all.

Part of my solution is to utilize the E-Trade Complete Savings account to connect them all together. This is basically E-Trade’s version of the online savings account which I’ve had for years. From my experience, the interest rate goes up and down (it is currently a so-so 1.20% APY), but it works very well for me as my bank “transfer hub”.

What are some important things to look for in such an account?

Basics and Cost
To start off, you’ll want a bank that offers a very low minimum balance and no monthly fees. A decent interest rate would be good, but a top interest rate isn’t critical since this isn’t where you’ll be keeping the bulk of your funds. You might want to keep a little bit of cash here in case you need to transfer some out quickly, and also to keep your bank from closing out an empty account.

Transfer System
Just about all banks allow ACH (automated clearing house) transactions, but you have one party initiate such transactions, and many “old-school” banks don’t do this. Accordingly, you’ll want your hub account to have the ability to “push” or “pull” funds in and out of multiple external bank accounts, with no transfer fee. Some banks only let you link one or two accounts, while others charge you to initiate transfers. For example, Bank of America allows you to move money to BofA for free, but charges if you move money from BofA using their system.

The E-Trade Complete Savings account has no minimum balance and no monthly fees, you can link an unlimited number of accounts, and there are no transfer fees.

Transfer Speed and Interest Crediting Policy
Of course, you’ll want fast transfer times. Some banks take 3 business days to move money in either direction, with your money in limbo and not earning interest anywhere. However, E-Trade is much faster, with transfer times of only 1 business day (which is how long it should take…). Also, if you schedule a funds transfer from an external account to E-Trade before the end of the business day at 4pm EST, they will actually credit your account the same day, even before they withdraw the money (although to prevent fraud you can only withdraw after 3 business days). However, you will start to earn interest starting that day, even before the money actually get debited from your source account!

Here is a sample screenshot:

In fact, if you initiate a transfer on Friday, you can earn interest at both accounts over the weekend. Here is a sample timeline:

  • Friday: You schedule a transfer of $1,000 from Bank A to E-Trade. You start earning interest at E-Trade on Friday. Nothing has happened at Bank A.
  • Monday: $1,000 is withdrawn from Bank A.
  • Thursday: $1,000 is now available to withdraw from E-Trade. You schedule a transfer to Bank B. $1,000 is debited from your account at E-Trade.
  • Friday: $1,000 arrives at Bank B.

Yes, it will take you a week to move the money, but you’ll be earning interest the entire time due to the double-interest over the weekend. Compare this to other accounts where the money is in limbo for 3-5 total days (3 business day + weekends/holidays) and you’re earning zero interest during that time.

For these reasons, I think the E-Trade Complete Savings account is very useful for the ability to connect any two bank accounts and move money relatively quickly with minimal interest loss. If you already trade stocks with them, it’s basically a no-brainer given the horrible yields on money market funds right now.

I have also heard good things about the transfer speed at GMAC Bank, but I don’t know if it’s quite this good as I don’t have any personal experience with them. I’m also concerned about how GMAC Bank will be around… if they get bought or sold to another bank, the website may disappear as well. I’m already going to miss my WaMu interface when I get forced over to Chase next month.

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Comments

  1. Doesn’t ING do the same thing?

  2. One thing you should be careful with E-Trade is to initiate transfers only with your primary computer. I bought a new computer and got a new wireless connection when I moved to a new apartment and tried transferring $3000 to another account. E-Trade didn’t like that and my money was not transferred out 5 business days later. I had to call them to inquire what was going on. After speaking with the customer service rep ( a very nice and friendly and helpful rep btw) I came under the impression that utilizing several IP addresses might cause E-Trades anti-fraud system to backfire and cancel transfers out of your account..

  3. MerchantofCards says:

    Wow, that’s a really strategy I never considered. Etrade Savings was doing really well there for a while – beating out most other high yield savings rates, but they dropped pretty quickly down to 1.2% in the past month or two. The FNBO / HSBC 3-5 day transfer systems are frustrating as hell, especially when you get money in on a Thursday or Friday and have to lose the weekend interest – this is a smart way to get around those banks’ deficiencies.

  4. In addition to what Blogging Banks says:

    I was expecting amazing things when I originally got my etrade savings account. However, that did not work out the way I was hoping.

    I have transferred money in about 10 times now. I have transferred money out 3 times.

    The first time I transferred out: They flagged my account and made me send in a notarized letter with a copy of my drivers license and social security and a statement claiming who I was.

    The second time: They flagged my account and made me fax said documents over and talk to their security specialists who asked those questions that get generated from your credit report

    The third time: Same as above.

    I got tired of it and had them initiate the transfer of 95% of my money I had in the account over to ING.

  5. I’ve actually found that my credit union has faster transfers than any of the online banks.

  6. How many transfer outs (withdraws) do they allow each month?

  7. ING Direct only allows a maximum of 2 or 3 linked bank accounts, and you don’t get the same interest crediting benefit. The fastest *any* bank can really do a transfer is Day 1 request, Day 2 withdraw from departing bank, Day 3 deposit into destination bank. I think ING is relatively good in that regard, as many banks take a lot longer.

    There is a limit of 6 withdrawals each month from the savings account, although you can also set up a checking account (which I used to have) in order to get unlimited withdrawals. The 6 withdrawal limit is a law applied to all savings accounts.

  8. I’ll never use Etrade. I was put on hold for more than 3 hours–twice–when I had to get money out of there.

  9. Vanguard bond funds allow checks of $250 of more,one I use VFIIX,current yield about 4.5% paid monthly. Good long time track record and you can sell any day.
    Pentagon Federal Credit Union has instant transfers (ACH) from other banks to them.

  10. Jonathan, I use the same system with Etrade. I also have the checking account to get around the 6 withdrawals per month. Once I got Etrade set up, it’s been a breeze to push and pull money to my other banks.

    One problem I’ve had is trying to confirm my Etrade accounts to other banks. Dollar Savings said Etrade changes $5 to confirm that I own an account with them, so I had to mail a voided check to DS. I just opened the Evantage accounts, and noticed that they had taken .42 out of my Etrade account but had put no deposits in. I was told that Etrade has a different “software” than Evantage and couldn’t deposit into Etrade.

    It’s no biggy though, since I can use Etrade to handle all the transactions anyway. It’s a good system.

  11. Rudolf Schmidt says:

    I stopped using E-Trade after they froze my account when I tried to transfer funds out and couldn’t “verify” my identity according to their garbage Lexis-Nexis data quiz. E-trade is the very last bank I would recommend as a transfer hub.

  12. Jonathan, have you successfully made large transactions, say $10,000, using your E*Trade hub without any of the hassles mentioned in some of the replies?

  13. I use both Etrade and Gmac as well as most of the other internet banks(Ing,Hsbc,Emigrant,Dollar Direct,wamu,but let me tell you, while Gmac is faster than most of the other banks, but it it isnt like Etrade. I set up a transfer from Etrade for Wed 4/8 and the money was in the other acc. on thur 4/9. I also set up a transfer from Gmac on thu 4/9 the money wasnt credited in the other acct til Sunday 4/12, another on 4/15 not credited til 4/17

  14. E*Trade is my primary savings account and have not had an issue. To me, they are the fastest to transfer into and out of and make available (HSBC is right up there as well). The slowest is ING. I have transferred large amounts that were, over 10k, and have not had an issue.

  15. I’ve been using e-Trade like this for over two years. As I have over $500K in assets there (Mainly IRA stuff) I’ve never had a problem with identification issues. but, one time I did get a letter saying I could do only 6 transfers / month out of the account.

    Overall it works great. (Loved it when the rate of over 5%).

  16. Financianista says:

    I think it depends upon what account you have with BofA. I have my ING, Dollar Savings Direct, Scottrade and Citibank USA accounts linked to my BofA MyAccess checking account. They’ve never charged me for transferring funds out of the BofA account.

  17. Jon @capitalistmaven.com says:

    Add me to the list of people experiencing the dreaded E*Trade account freeze. It’s really nasty when it happens and has caused my trust in them to fall greatly. It happened on my honeymoon in Hawaii and left me unable to even use my ATM card. Their “security” office is only open 9-5 eastern time on weekdays and hold times are 30 minutes+ (yes they freeze alot of people…), so good luck if you are outside the timezone. Some of my autopay’s bounced due to the account freeze and they were less than helpful regarding the fees incurred.

    I would be really skeptical to recommend them as a “transfer hub” due to the likelihood of getting your assets frozen in limbo for days or even weeks if you trigger their freeze system.

  18. I have had the same issues about verifying my identity with E*Trade. It took 4 days of calling until I got someone who did not read from a script. I LOATHE E*trade. An absolutely horrendous customer service experience.

  19. Thanks for letting me know about this! I have an E*TRADE Complete Savings Account, but I never would have thought to use it like this. Honestly, I still probably won’t completely change how I do things, but it might make a difference in the “which savings account should I use for this task?” question.

  20. Wow, I’ve never had my account frozen by Etrade, and I’ve transferred lots of money from lots of different accounts. I’ve probably had over 10 linked at one time or another. I don’t think I’ve ordered a transfer while traveling internationally.

  21. I’ve also transfered large amounts of money with no problems. One thing that might be causing others to have problems is logging in using different computers. I never log in to any of my financial accounts except with my own personal computer. I also no longer use ATM’s, so I don’t have any problems there.

  22. I also used to use E*trade in a similar fashion but had many phantom charges show up on my account, and the freezing happened to me too. I’m not a fan of E*trade whatsoever & would counsel against the approach above.

    E*trade also very consistently changed their policies without notifying the customer (usually in manners that cost the customer more). Their customer service was horrible. I wish I could post some of the absurd email chains I had with their customer service here.

    No way would I ever go back to E*trade.

    – K

  23. Maybe they play favorites. 🙂

  24. Another victim of E*Trade’s freeze fund strategy here. Once they freeze the customer’s account, they will ask customer to send notarized letter, lost the letter by accidents, repeat same request to customer until they smell possible lawsuit from customer. I suspect their process is designed to hold the fund as long as possible.

    What if the customer is unable to do their request? Well E*trade doesn’t care. They will hold the fund forever. That’s what happened to me.

    If you are unlucky and selected by E*trade, I suggest you to file complaint to SEC and Attorney General of Texas. You may need the websites someday.

    http://www.sec.gov/complaint.shtml
    https://www.oag.state.tx.us/consumer/complain.shtml

  25. I use ING as my hub but I love the way you have this all laid out.

  26. I’ve had an E*Trade brokerage and bank accounts for years now but I can’t recommend it for the following reason: E*Trade imposes a lifetime limit of eleven (11) linked external accounts. This limit is per account number and is a cumulative total of every external account to which you’ve created a link, so deleting a linked account does not diminish this total. Once you hit eleven you can never add any more.

    I have over a dozen bank accounts at a dozen different banks, so for me E*Trade is inadequate due to this limitation; otherwise I’ve had no serious problems with E*Trade. To get around this limitation I use Provident Direct, which has an easy and versatile ACH scheduling function and no limit on the number of external accounts to which it can be linked.

  27. Mr.Hengist – If you call E-Trade, they will remove this temporary limit and let you link more accounts. The limit is only to prevent people from collecting all those 50 cent trial deposits over and over.

  28. Jonathan – I did call and specifically ask the customer service rep to increase that limit, or at least allow me to link to another account after I had deleted a link (which had been established two years prior), but after speaking to his manager he told me that this was a hard limit which could not be changed. He suggested that I could get around this limit by creating a new account; I deferred because it would be such a lot of work to switch the account number of my primary checking account that it wouldn’t be worth it.
    However, it certainly seems worth another try in light of your comment – thanks, I’ll give it a go! Although I’ll probably wait until Friday as I’ll be able to speak to the daytime shift.

  29. Wachovia 5% APR(first year 2% thereafter) + 5% end of the year bonus saving account. I think it is a good deal, though you can not make much money because you can only deposit 100$ a month plus 1$ on each debit card transaction but this is great automatic way to have some savings with high yield

  30. what about schwab? they recently introduced their 2% online savings account, which is higher than most i’ve found, with the ability to link it to brokerage, external accounts, etc.
    Etrade as a company really appears to be struggling. For piece of mind, I’m considering leaving them altogether and moving to schwab.

  31. Don’t forget ET has an undisclosed lifetime limit to number of external accounts that you can link

  32. DataIsGold says:

    d setin,

    The Savings account at Schwab isn’t fully setup for online access, as of now you can only see balances no transactions.

    You have to send them a form to add it to Schwabs Moneylink. After you setup your ACH accounts and verify the deposits you have to call them. They always ask how much you’ll be transferring today. I answer I haven’t decided yet.

    Overall it’s not too bad to setup ACH accounts.
    You can’t ACH directly INTO your checking/savings it sits in your brokerage for 3days then you can transfer it to the checking/savings.

    The converse is also true.
    You first transfer into your brokerage from the checking/savings then out to your other accounts.

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