NewBank 6.50% APY 6-Month Installment Savings, NY/NJ

NewBank is offering very high rates on their short term and long term installment savings accounts. The Vacation/Christmas Club account has a six-month (168 days) term with a yield of 6.50% APY. Contract amounts are $1000, $3000, and $5000. The Education Club account has a fifteen-year term with a yield of 7.00% APY and a ten-year term with a yield of 6.50% APY. Contract amounts are $10K, 25K, 50K, and 100K. Customers can open theses accounts for any purpose, not just for what the names of the accounts suggests. I was told customers are allowed to open as many accounts as they wanted. Accounts can only be opened in-branch.

As is typical of installment savings accounts, the rate is guaranteed during the entire term and the contract amount will be paid at maturity provided all the payments are made on time. Contracts maturing on Saturdays, Sundays, and legal holidays earn interest up to the next business day. While no penalty is specified, customers are not allowed to make more than the stated payment amounts. There is no penalty fee for missed payments. Missed payments will result in the amount at maturity being different from the original contract amount.

The Vacation/Christmas Club account requires payments to be made every two weeks by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is 14 days interest.

The Education Club account requires payments to be made once per month by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is half of the interest earned.

NewBank is FDIC insured and has a 4 star rating at Bankrate.com.

Scan of rate sheet (click on image to enlarge)

Branches:

146-01 Northern Boulevard
Flushing, NY 11354
718.353.9100

1475 Bergen Boulevard
Fort Lee, NJ 07024
201.585.BANK

800.207.2101
www.newbankusa.com

mh83 said: NewBank is offering very high rates on their short term and long term installment savings accounts. The Vacation/Christmas Club account has a six-month (168 days) term with a yield of 6.50% APY. Contract amounts are $1000, $3000, and $5000. The Education Club account has a fifteen-year term with a yield of 7.00% APY and a ten-year term with a yield of 6.50% APY. Contract amounts are $10K, 25K, 50K, and 100K. Customers can open theses accounts for any purpose, not just for what the names of the accounts suggests. I was told customers are allowed to open as many accounts as they wanted. Accounts can only be opened in-branch.

As is typical of installment savings accounts, the rate is guaranteed during the entire term and the contract amount will be paid at maturity provided all the payments are made on time. Contracts maturing on Saturdays, Sundays, and legal holidays earn interest up to the next business day. While no penalty is specified, customers are not allowed to make more than the stated payment amounts. There is no penalty fee for missed payments. Missed payments will result in the amount at maturity being different from the original contract amount.

The Vacation/Christmas Club account requires payments to be made every two weeks by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is 14 days interest.

The Education Club account requires payments to be made once per month by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is half of the interest earned.

NewBank is FDIC insured and has a 4 star rating at Bankrate.com.

 

Scan of rate sheet (click on image to enlarge)

 

Branches:

146-01 Northern Boulevard
Flushing, NY 11354
718.353.9100

1475 Bergen Boulevard
Fort Lee, NJ 07024
201.585.BANK


800.207.2101
www.newbankusa.com

Excellent find mh83!

mh83 said: I was told customers are allowed to open as many accounts as they wanted.I wonder how they would feel if I were to open 20 of the 168 day accounts?

Maybe, like Wilshire, you can open an account for more than they show on their chart.

I am in NYS , but not in NYC area..can I apply?

mh83 said: There is no penalty fee for missed payments. Missed payments will result in the amount at maturity being different from the original contract amount.
Does this mean the account works like a 6.5% APY CD if only the first payment is made?

glxpass said: Despite its 4-star rating, what would happen to the interest should the bank go out of business before the end of the term? I'd be worried about this, especially with the 10 and 15-year terms.


FDIC said: FDIC deposit insurance covers the balance of each depositor's account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank's closing.

you are earning 6.5% APY.... but obviously you are not putting 1k up front therefore you are earning less, but this shouldn't really be a problem. I'm gonna ask them a few questions about a few things -- honestly.. it's a great deal, but it's too much of a pain in the butt to pull off..

outlawnyc said: you are earning 6.5% APY.... but obviously you are not putting 1k up front therefore you are earning less, but this shouldn't really be a problem. I'm gonna ask them a few questions about a few things -- honestly.. it's a great deal, but it's too much of a pain in the butt to pull off..
When you talk to them, can you find out if 6.5% APY is earned if deposits are missed? It may be possible to abuse these accounts so they become CDs.

ok folk, i'm not a rate chaser like most here, so i'm usually a lurker in these type of threads, but seeing these lately i have to say something.

i've seen the threads about the high yield reward checking accounts, and glanced at some of the details. because they had certain requirements for those reward accts, like e-statements, minimum number of debit card transactions, dd, etc. i guess it was possible for them to offer such high rates if their costs were low and they were getting some kind of fee income somehow from the transactions. but i guess most here just looked at the FDIC seal and said that's good enough for me and opened an acct. those reward checking accts have the option of lowering their rates at anytime as u have seen.

now all of a sudden i see post for these high yielding installment savings accts. first thing i notice is these are all from korean banks. next unlike the reward checking accts, it doesn't seem like these accts are low cost accts. so i have to ask how are they offering such high rates? in this OP, 7% LOCKED for 15 years? can someone please explain the logic behind these?

if i were about to open an acct here, i would be contacting the FDIC about this bank and the product.

remember, up until last fall certain money market accts were not insured by the FDIC. but they change that(maybe just temporarily) to avoid a run on banks. so even if these banks are a member of the FDIC, this particular product may not be covered.

AGAIN, if u are planning on opening such an acct, it's in your best interest to find out these details from the FDIC beforehand. there is no rush, if the product is good, it will still be there.

just a obligatory warning folks, carry on.

TheWiseGuy said: ok folk, i'm not a rate chaser like most here, so i'm usually a lurker in these type of threads, but seeing these lately i have to say something.

i've seen the threads about the high yield reward checking accounts, and glanced at some of the details. because they had certain requirements for those reward accts, like e-statements, minimum number of debit card transactions, dd, etc. i guess it was possible for them to offer such high rates if their costs were low and they were getting some kind of fee income somehow from the transactions. but i guess most here just looked at the FDIC seal and said that's good enough for me and opened an acct. those reward checking accts have the option of lowering their rates at anytime as u have seen.

now all of a sudden i see post for these high yielding installment savings accts. first thing i notice is these are all from korean banks. next unlike the reward checking accts, it doesn't seem like these accts are low cost accts. so i have to ask how are they offering such high rates? in this OP, 7% LOCKED for 15 years? can someone please explain the logic behind these?

if i were about to open an acct here, i would be contacting the FDIC about this bank and the product.

remember, up until last fall certain money market accts were not insured by the FDIC. but they change that(maybe just temporarily) to avoid a run on banks. so even if these banks are a member of the FDIC, this particular product may not be covered.

AGAIN, if u are planning on opening such an acct, it's in your best interest to find out these details from the FDIC beforehand. there is no rush, if the product is good, it will still be there.

just a obligatory warning folks, carry on.

Unless you have definite information such as that this bank is not FDIC insured, I would not post such crap. Furthermore, by stating that this is Korean bank, therefore implying Medoff scheme. You are scaring people without fact is not doing anybody any good. Please have fact before posting such nonesense.

ap007 said: 1000$ 6.5% should become 65$ in 1 year

how does it become 82$ in 168 days!?

===
umm it says biweekly, more confused now

You are looking at the biweekly installments, that is not the interest. The interest you will get on a 1k plan in 168 days should be about $16.

Ecuadorgr said: Wiseguy....

You notice that all these installment accounts are very limited in the sense that you have to open them in branch, they have low limits, maybe low duration and the burden of not missing installments. (Ok, these guys also have the 100k/10year plan which might be more interesting for those who can keep up with the transfers)

Don't see 6.5% and 5k limit and think you will make over $300. Since it is half a year and not up-front but installments you will only make around a quarter that. So in the best case (assuming one account) you will have made around $80 in half a year (if my quick calculation is correct). Given that you would have gotten some interest in any account (albeit less), this overall seems to me more hassle and less money than the $50 - $100 signup bonuses for checking accounts.

Ecuadorgr,

i'm a finance person, i know it's in stallments and it's not 6.5% on $1000.

bottomline is it is still 6.5% return on whatever money u give to them. if u give $100 per month, ur getting 6.5% on that $100.

before people start thinking i'm a racist, let me elaborate on the part about these being korean banks.

first i'm not korean. however, i have been told in the past from my korean friends that there are korean lending circles that exist and have been around for a long time. they were probably started would good intentions but like anything fraud could eventually creep into them. the way these installment accts are structure seem very much like some of these lending circles, i've heard of. what better way to guarantee that you have a certain amount of funds available to keep the circle going then offering thse types of accts. if they can make >7% of the funds, i guess all is well, but if they can't, it could collapse like a ponzi.

TheWiseGuy said: before people start thinking i'm a racist, let me elaborate on the part about these being korean banks.

first i'm not korean. however, i have been told in the past from my korean friends that there are korean lending circles that exist and have been around for a long time. they were probably started would good intentions but like anything fraud could eventually creep into them. the way these installment accts are structure seem very much like some of these lending circles, i've heard of. what better way to guarantee that you have a certain amount of funds available to keep the circle going then offering thse types of accts. if they can make >7% of the funds, i guess all is well, but if they can't, it could collapse like a ponzi.

Unlike Madoff it is FDIC insured and therefore even if it's a ponzi you will not lose any money. Plus I doubt the banks could get away with doing that. FDIC requires all banks to be examined on a regular basis and they will give a cease & desist order if the bank is doing anything shady.

the funny thing about this thread is that people took the time to criticize what i wrote but don't want to take the time to shoot a quick email to the FDIC and get the REAL answer.

i know i would if i were investing my money with them. it doesn't cost a dime. unlike agape world, these banks are members of FDIC so it should be a easy enough answer for them.

again, it's amazing. i'm not wasting anymore of my time with this. good luck everyone.

glxpass, the issue you bring up is why I would like the meaning of "no penalty fee for missed payments" to be clarified. The way it is worded, it sounds stated APR is still earned even with late payments, as long as no early withdrawals are made.

mh83 said: There is no penalty fee for missed payments. Missed payments will result in the amount at maturity being different from the original contract amount.

The Vacation/Christmas Club account requires payments to be made every two weeks by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is 14 days interest.

The Education Club account requires payments to be made once per month by auto-transfer from a NewBank checking account (the free checking account qualifies for this purpose). Interest accrues on the balance in the account each day but is only paid at maturity. The early withdrawal penalty is half of the interest earned.

early withdrawal penalty is half of interest

in india its common to get 10-12% interest (for indians only)

not so hot deal for me

outlawnyc said: who cares if they pay interest at maturity.... if you're gonna do the account you better be in a position to continue funding the acct. I just have to make sure the products are indeed FDIC insured..and I need my funding account to also be bearing 3%

I need my money to yield greater than 4% to stay ahead of inflation and to cover expenses,

TheWiseGuy said: the funny thing about this thread is that people took the time to criticize what i wrote but don't want to take the time to shoot a quick email to the FDIC and get the REAL answer.

i know i would if i were investing my money with them. it doesn't cost a dime. unlike agape world, these banks are members of FDIC so it should be a easy enough answer for them.

again, it's amazing. i'm not wasting anymore of my time with this. good luck everyone.

What's more funny is why you didn't take the time to email them either..

Nevertheless, I emailed the FDIC myself. The answer is yes, it's FDIC insured.

--------------------
Dear Mr. Strabo:

Thank you for contacting the FDIC. Specifically, you asked the following:

“Is NewBank's 'Christmas / Vacation Club Account' covered by the FDIC?”

FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs).

According to NewBank's web site, NewBank's Christmas/Vacation Club account is a time deposit account. This information can be found on NewBank's web site at: <http://www.newbankusa.com/new_page.php?code=personal_banking_time_deposit_#Christmas>

The basic insurance amount is $250,000 per depositor, per insured bank.

This insurance will last until December 31st, 2009.

Thanks!

glxpass said: outlawnyc said: GLX -- personally, for me, what interested me in this account was the 24 months 6.5% APY offer...which is really great.

as for the other poster saying 7% over x years is really good.. look at interest rates over the last 40 years -- see how high they've gotten in the past -- also -- consider how much money the government is printing -- interest rates are going way up in the coming years -- i would definitely not lock up my rate for a long time, unless... i'm getting an enormous rate.
Sorry, I must be missing something. I don't see a 24-month product offering a 6.5% APY. The Summer/Vacation club product is 6.5% APY for 168 days, with a maximum contract amount $5K; the Education Club product offers 6.5% APY for 120 months (10 years), with a maximum contract amount $100K.

I'm sure you're correct about interest rates rising in the near future, and I certainly wouldn't put a large portion of my available funds into a 15-year product, even at 7%.

Federal Funds and Discount Rates - January 1990 through April 30, 2009

Historical Changes of the Target Federal Funds and Discount Rates - 1971 through April 2009

Of course, past performance is no guarantee of future performance, but putting away $319.21/month for 15 years at 7% APY doesn't look so bad to me, especially if that's only one relatively small investment out of a range of diversified investments.

To be candid, the 15-year term still gives me pause, because I'm placing a long-term bet on rates, but I keep coming back to the scenario that 7% APY over 15 years isn't a bad deal, even in historical context.

If the bank fails before maturity, as long as my deposits have been earning 7% APY and I receive the accumulated interest up to the point of the bank failing, and as long as the funds become liquid at that point, then I'm fine with the failure possibility.

Feel free to let me know if I'm overlooking anything. Thanks!

clearly i meant 24 week. srry