HMBradley Bank Review: 3% APY After Saving 20% Of Your Deposits

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Black Friday promo: If you open via a referral link between 11/27 and 12/25 and complete a direct deposit, HM Bradley will give you 3% APY immediately and lasting until the end of 2020, instead of the usual 1% APY. Normally, you would have to wait until the next quarter so that they can calculate your savings rate. My referral link (wish they had better landing pages, but thanks if you use it).

Applicants who use your unique referral link to successfully open a new HMBradley Account between November 27, 2020 and midnight Pacific Time on December 25, 2020 and establish at least one qualifying direct deposit per month before December 31, 2020 can earn the Tier 1 annual percentage yield from the date of first direct deposit through December 31, 2020. These new customers are eligible to remain in Tier 1 until January 1, 2021, at which point their new Savings Tier will be set based on their savings rate of the previous quarter.

Original review:

HMBradley is a fintech bank startup that differs by offering customers a variable interest rate based on their savings rate. Deposits are FDIC-insured through Hatch Bank. As of October 2020, the top rate is 3% APY, which is over 2% higher than the popular online savings accounts like Ally Bank, Capital One, or Marcus. Is there a catch? What’s the fine print? Here’s my review of HMBradley after opening an account and reading their FAQ, fee schedule, and deposit agreement. Thanks to reader Guarav for the tip.

Rate tiers. Interest is earned on balances up to $100,000 and is set each calendar quarter. The interest rate updates for all customers at the beginning of each calendar quarter: January 1st, April 1st, July 1st, and October 1st. In order to qualify for a “Savings Tier”, you must receive a direct deposit at least once every month and save at least 5% of your quarterly deposits.

New customers start in Tier 3 and stay there as long as they maintain at least one direct deposit per month. For example, if you open in October, the next reset date would be January 1st and your interest earned for the next 3 months is based on your activity in the previous 3 months. Here are the current rates for each tier:

Requires a “real” direct deposit every month. You must receive some sort of direct deposit each month, as defined below:

For our accounts, we define direct deposits as those deposits made by the customer’s employer or a federal or state government agency or retirement benefits administrator. These generally include payments made by corporations and other organizations. We do not consider deposits to an account that are made by an individual using online banking or other payment provider such as PayPal or Venmo as direct deposits.

They appear to be relatively strict on receiving a “real” direct deposit and not a person-to-person transfer. Based on my experience, they have a system for detecting incoming deposits and marking them automatically as “real”, but it is not 100% accurate and your direct deposit may have to be reviewed manually. Their online account interface clearly tells you if you have made the required direct deposit for the current month (see screenshot below). If not, you should contact them in order for them to manually check and mark your transfer as a direct deposit. I have a legit employer direct deposit and still had to do this every month. Having it marked properly is required to get the top rate.

Savings rate is based on ALL deposits and withdrawals. For the calculation of “savings rate”, all deposits are considered including incoming transfers from another personal bank account. At the same time, your “spending” will also include any transfer out of your account, even if it’s just to another bank account that you own.

Basically, money has to keep coming into HMBradley and not go back out, if you maintain a positive savings rate. That’s rather clever. They just have to maintain the high interest rates to keep reinforcing this cycle.

NOW account? No paper checks. It should be noted that HM Bradley’s account is actually a lesser-known form called a “negotiable order of withdrawal (NOW) account”, which per the CFPB which gives the bank the right to require at least seven days written notice of a withdrawal. Supposedly, this is rarely done in practice. Like a checking account, there are no limits on the number of withdrawals each month. However, unlike a checking account… there are no checks! I suspect that not having to deal with paper checks saves them a good chunk of money. I’m personally fine with that as long that equates to a higher interest rate.

The Bank offers Negotiable Order of Withdrawal transaction checking accounts, which allows you to make deposits by check, ACH payment, transfer from another account at the Bank, or wire transfer. NOW accounts only are available to consumers for personal, family, or household purposes. The Bank does not offer business accounts and you agree not to use your HMBradley Account for business purposes. The Bank may request 7 days’ advance notice of a withdrawal or transfer of funds from the NOW account.

Credit card adds 0.50% APY. They recently added a credit card, but it is only open to those that have sizable payroll direct deposits as that is part of their creditworthiness criteria. If you do get it, you can earn another additional 0.50% APY, for a total of up to 3.5% APY.

Additional features. No minimum balance, no monthly fees. $100 minimum to open. Interest is compounded daily and credited monthly. No paper checks. There is fee-free ATM access via your Debit Mastercard at over 55,000 ATMs in the STAR and MoneyPass networks (or at any store that allows for cash back on debit purchases). There is no online billpay (“coming soon”) and there is no ability to deposit checks (remote deposit also “coming soon”). They may close your account without notice if you maintain a zero balance.

My thoughts. In the current rate environment, the ability to earn 3% APY on up to $100,000 is exceptional. I don’t know of any “rewards checking” account has a balance limit of $100,000. This can be a good opportunity if you understand the rules and the top interest rate stays higher than the competition.

All new customers that open now will earn a maximum of 1% APY until the next quarter starts (January 1st, 2021 as of this last update). This is actually a good rate in the current rate environment. If your savings rate is determined to be above 20% as of December 31st and you had a “verified” direct deposit each month, then you will reach Tier 1, but will Tier 1 still be 3% APY then? There is no rate guarantee and they don’t promise to provide any set amount of advance notice. I was happy that they maintained their 3% APY rate for October-December 2020, but it should also be noted that some of their lower rate tiers have already dropped from when they first starting taking deposits.

The idea of incentivized higher savings rates is good, but it may be a tough hurdle for those living paycheck-to-paycheck. On the other hand, as long as you can switch over a partial direct deposit, adding some consistent amount each month with minimal withdrawals would also work.

Bottom line. HMBradley is a digital bank startup that differs by offering customers a high rate (currently up to 3% APY) based on the percentage of their deposits that they save. They require moving over a monthly direct deposit, and the rules are a bit more complex than I’d like, but if the rates hold steady it can be a very competitive offer for motivated savers.

Added 11/16/20: HMB added a new referral program. If you sign up via my referral link, I will get a free “Tier Rewind” if my savings rate drops later on. You can refer others for the same benefit. Thanks if you use it! Also here is an interesting interview with the CEO, which thankfully shows a good respect for anti-fraud vigilance.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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Comments

  1. I am a bit confused.
    Would you need to save a percentage from your direct deposit? Or from your pay?
    Let’s say I get 1000 a week from work and am saving 75% in my 401k and 250 a week in direct deposit. I am also able to save 20% of that. Why do your 401k contributions count as you say and qualify me as a low/tier one saver?
    I believe it’s probably just 20% of your direct deposit that you need to save, no?

    • Their savings rate is calculated based on all deposits and withdrawals into/out of the account.

      I’m just saying that in general, most people are not going to both save a large percentage in their 401k and also 20% of their remaining take home pay. If you’re doing that, I would consider you a high saver! 🙂

      • Thanks Jonathan. Sorry for duplicate comment below. I agree that going through hoops for something that will probably be cut not worth it. Marcus, Purepoint, Simple…all cutting. Probably won’t chase these on line bank deals anymore. Seems like it’s dying.
        I was lucky to open a add anytime 17 month cd at Navy in January for 2.25 with just $50 with plans to add to it after taxes were figured. Will probably just stick with that.

  2. I am confused.
    Let’s say I make 1000$ a week and save 75% of it in a 401k. My direct deposit is 250$ and I am able to save 25% of that.
    That would qualify me for tier 1, correct? How do they know what I get paid. Surely it’s based off your direct deposit and not pre-tax amount? Why do you think I would be tier one/low saver. I understand this to mean 25% of your direct deposit saved. No?

  3. So if I park, say, 25% of my bimonthly paycheck there, and then transfer up to a total of 100k,
    Would that work? Could I transfer the 25% DD out monthly to maintain a balance of 100K?
    Or would I have to DD the entire check?

    • They don’t say anything about size, they just require at least one direct deposit per month. The savings rate is determined by total deposits/withdrawals of any type.

      • I think you may have answered a question I have. If I made a minimal direct deposit each month, but transfer excess cash, the savings rate is based on both direct deposit and extra deposits vs withdrawals. Using it as a secondary savings account would be easy to get a >20% savings rate.

        But yes, it would be more work than just getting a run-of-the-mill savings at a normal bank.

        • Yes, but remember that your savings account balance essentially always has to keep going up. If you take money out via transfer to external savings account, it counts as spending and thus will lower your savings rate for the next quarter.

  4. So to be clear, for every $1000 you add to the account (whether by direct deposit or other incoming transfer), you could only use $800 of it for paying bills or external transfers out. For every $1000 that comes in, your balance at the end of the period needs to be $200 higher than before those funds came in.

    Sounds like the way to game the system (err, make the most advantage of this offer) is if you have another checking account you use as a primary, but can split your direct deposit so only part of your paycheck goes into this account. Or for a dual income household, only one partner deposits their paychecks here.

    Suppose you have $50k in cash you want to earn 3% on. Right now, you could open the account with just $1k, and direct $1k/mo of your paycheck into this account as a direct deposit. Closer to July 1, you could transfer more of the balance in. Then on an ongoing basis, you could transfer in $1000/mo and spend up to $800 of it, so you’re saving 20% of your $1000/mo but earning 3% on the whole $50k balance.

    You can transfer more in the account at any time and earn 3% on that balance, but if you transfer a big chunk out to another account, you would lose your tier status for that quarter. In that way, it functions a little like a CD with a penalty. Although suppose you transferred out $10k of your $50k balance, that would cost you 3% for the whole quarter (or $375), where if you’re buying CDs you could buy them in $10k chunks. So this account is really designed to be your only/main savings account, and penalizes you for ever spending it. If you used this account to save up for a car, when you actually withdrew the money to pay for the car, your interest rate would plummet for that quarter.

    Overall, not worth it to me.

    • I think you have it right. If you take out too much money during a certain quarter, you will get penalized for it the next quarter, like an interest time-out. But at least it wouldn’t be retroactive and you could just take out all/most of the money when you know a zero interest quarter is coming ahead.

  5. The routing number for HMBradley for Direct Deposit is for RANCHO SANTA FE THRIFT & LOAN ASSN.
    This doesnt match with the bank’s name, is that a concern?

  6. Thanks, that makes sense. I will try what Brad F suggested above.

  7. Jason Boxman says

    This sounds like a good deal in a declining interest rate environment, where by December it’s likely rates elsewhere will be even worse, and 1% will look quite good. If the top rate is at least 1% for Q1 2021, that’ll be even better relative to alternatives! (Grabbing the $500 bonus from Simple was my high water mark this year; how times have changed!)

  8. Jason Boxman says

    If you have an Alliant CU account, it looks like you can’t link to your account. It doesn’t show up in the list of accounts. I don’t see any way to enter a routing # directly instead as is usually possible. I guess I’ll have to bounce funds through my Ally account. The FAQ provides no additional information about supplying a routing # and account # manually. It might not be possible.

    They’ll supply a digital voided check, and even email your employer to help with a direct deposit, if you’d like.

    This’ll be interesting.

    I’m currently told: “You’re not earning interest this quarter.” I’ll have to fund and see if that changes for this quarter or not. It also says “Set up a direct deposit to be eligible for Savings Tier.” So that must be the magic required. So I’ll know by the end of this month.

    Routing and account # are easily provided for direct deposit, no hunting around for it as in decades past.

    Good luck!

  9. Because of your article, I am interested in an HMBradley Bank NOW account. I sent a few questions to the bank and got the response quoted below back. I thought I would share because some of the information is different or was not in your article.
    “ 1. We do not have a bill pay feature available at this time, but our development team is working on it
    2. We do not have checks available
    3. Inbound transfers that are originated from your HMBradley account are limited to $2,500 per day. There are no limits on transfers out of your HMBradley account. We also have no limits on incoming transfers originated from other institutions.
    4. We do allow direct debits. These can be set up with your debit card, or set up with the account & routing numbers where the payment interface enables it.”
    Your article says: “You can probably work around most things using the online Billpay feature.” Note that item 1 from the bank says currently no bill pay feature. However, because direct debits are allowed (item 4), then it appears that one could use a third party bill pay. For example, Bank of America allows you to specify multiple “pay from” accounts, including accounts at other banks.
    Thank you for continuing to provide me with new ideas and products in your articles.

    • Thanks, I have updated the article to reflect that there is no online billpay. I just use it as a savings account, and have able to ACH push/pull initiated via Ally Bank with no apparent limits.

  10. Washerdreyer says

    Where’s the info about needing a high direct deposit to get the credit card? Data points on how high? I purposely have only a small DD going in since it’s a hassle to withdraw it, but it’d be worthwhile to briefly increase it on order to get up to 3.5%

    • Here are their terms: https://www.hmbradley.com/credit-card-terms

      My only data point is that they told me my direct deposit “suggested” an income under about $36,000 which was too low to be considered for their credit card. Therefore, you would want to have a direct deposit total of probably at least $3,000 after tax to qualify for the credit card. There is no public application, you must wait until it shows up in your account, presumably after a month at least of having the minimum direct deposit.

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