From Ally Bank to Capital One 360, online banks have made FDIC-insured banking more accessible to regular consumers and business owners. Offering savings accounts and CDs – but not offering loans – GE Capital Bank is one such online bank. It’s worth noting that GE Capital Bank is distinct from GE Capital Retail Bank, which offers its own suite of products, including loans.
GE Capital Bank, which is headquartered in the Salt Lake City area, provides FDIC insurance – up to a maximum of $250,000 per individual – on its clients’ deposit accounts. It lacks physical bank branches, but enables its customers to bank online or over the phone.
High-Yield Savings Accounts
GE Capital Bank’s high-yield savings accounts come with an annual percentage yield (APY) of 0.90%, although the bank advises that this rate could vary at any point after the account’s opening, depending on prevailing interest rates on savings accounts at competing banks. In practice, changes appear to be irregular and infrequent. The 0.90% APY is significantly higher than many national brick-and-mortar banks, including Wells Fargo and Bank of America, as well as many online banks, such as Ally Bank.
Like other online savings accounts, withdrawals are limited to six per statement cycle; however, there’s no minimum opening deposit or daily account balance, and no transaction fees for transfers. Interest is compounded daily and paid on a monthly basis. Account holders can’t carry more than $1,000,000 in their accounts at any given time.
Certificates of Deposit
GE Capital Bank offers CDs of varying term lengths, including 6-, 9-, 12-, 18-, 24-, 30-, 36-, 48-, 60-, and 72-month vehicles. Current rates range from 0.70% on the six-month vehicle to 2.13% on the six-year vehicle, with the popular 12-month CD yielding 1.04%. By contrast, Ally’s five-year and 12-month CDs yield 1.60% and 0.99%, respectively. These rates remain constant for the entire term of the account, but customers enjoy a 10-day rate guarantee that locks in the best rate occurring within the first 10 days of existence. In other words, if rates go up during the 10-day period, you’ll get a better rate for the CD’s entire term.
Like GE Capital Bank’s savings accounts, these CDs come with a maximum deposit of $1 million. A minimum deposit of $500 is required. Each CD assesses a significant penalty for early withdrawal, ranging from the equivalent of 90 days’ interest for CDs with terms of 12 months or less, to a full year’s interest on the six-year vehicle. If you withdraw funds too early, you could lose some of your principal.
Although billed as an online bank, GE Capital Bank’s phone banking services mirror its online options. You can use the company’s 24-hour automated system to make transfers and deposits or check your balance, and the company’s human operators are available to assist with more complex transactions, such as wire transfers.
Unlike other online banks, GE Capital Bank provides the option to do all your banking by phone. This might be useful if you lack reliable Internet service or have reservations about transmitting sensitive personal or financial information online.
Like some other online banks (including Ally Bank), GE Capital Bank offers CD ladders. A CD ladder contains multiple CDs of varying term lengths, typically ranging from one to six years, that renew automatically upon expiration. “Laddering” allows depositors to build long-term savings plans without losing penalty-free access to their funds for years at a time.
Before setting up a ladder, a preferred maximum term length must be selected, such as three or five years. The maturity dates of the CDs in the ladder would then be staggered at one-year intervals, so a ladder with a maximum term of five years would include one-, two-, three-, four-, and five-year vehicles.
Upon maturity, each CD in the ladder is renewed as a new CD with the maximum specified term length. In this way, each rung of the ladder matures every year. Once every CD in the ladder has renewed, the whole process continues on indefinitely until the account holder chooses to stop it. The account holder can also cancel an individual CD’s renewal and withdraw his or her funds at any time, although early withdrawal penalties still apply if funds are withdrawn before the CD matures.
Internal/External Electronic Transfers & Wire Transfers
GE Capital Bank customers can register up to four external bank accounts for online or over-the-phone electronic funds transfers. These transfers don’t cost anything to execute, although outgoing transfers from savings accounts are limited to six per billing cycle. Incoming transfers are unlimited. Depending on the destination or origin bank, these electronic funds transfers may take one to three business days.
Customers can also use GE Capital Bank to execute wire transfers. These are more flexible than electronic funds transfers because they can be issued to (and received from) any bank or institution with a routing number – not just the four accounts registered for electronic funds transfers. That said, they must be initiated over the phone and are governed by the six outbound transfer per cycle limit. GE Capital Bank’s free outbound wire transfers give it a leg up over other online institutions, such as Ally Bank and Capital One 360, which charge outgoing transfer fees of $20 and $40, respectively.
1. Highly Competitive Interest Rates
GE Capital Bank’s savings and CD interest rates are among the best in the online banking sector. GE Capital Bank’s five-year CD yields 2.08%, while Ally Bank’s yields just 1.60%. Meanwhile, the 0.35% yield on Everbank’s nine-month CD is half that of the yield on GE’s comparable vehicle. The comparison with traditional banks is even starker. For instance, Wells Fargo’s 58-month CD yields just 0.50%, a far cry from the 2.08% yield on GE Capital Bank’s five-year CD. Meanwhile, GE Capital Bank’s 0.90% savings account yield beats Ally’s 0.87% yield. Although Everbank doesn’t offer a savings account, its money market account rate ranges from 0.61% to 0.86%.
2. No Minimum Balances or Account Fees on Savings Accounts
GE Capital Bank customers enjoy few restrictions on their accounts. Savings accounts come with no account fees or minimum balances, and CDs feature a minimum deposit of just $500 (compared to $1,500 for Everbank). To be fair, GE Capital Bank’s early withdrawal penalties are steeper than some other online banks – GE charges up to a year’s worth of interest for prematurely terminated CDs, while Ally levies a maximum of six months’ interest.
3. Six Year CDs
Most online banks, including Ally Bank and Everbank, don’t offer CDs with terms longer than five years. This makes GE Capital Bank’s six-year CD a relative rarity among its direct competitors. Many traditional banks, such as Bank of America and Wells Fargo, offer CDs with terms of as long as 10 years; however, these often come with high minimum deposits and shockingly low interest rates. For instance, a 10-year Bank of America CD with a $500,000 balance yields just 0.20%.
4. 10-Day CD Rate Guarantees
On all newly opened CDs, GE Capital Bank customers enjoy access to the best possible rate within the first 10 days of the account’s life. For instance, if the advertised rate on an account holder’s five-year CD fluctuated between 2.08% and 2.15% within 10 days of its opening, the account holder would be locked in to the 2.15% rate for the CD’s entire duration, regardless of the advertised rate on its first day of life. Ally Bank offers an identical guarantee, but Everbank and Aurora Bank don’t. Most traditional banks don’t either.
5. Free Wire Transfers
Both incoming and outgoing wire transfers are free at GE Capital Bank. This is a unique perk among online banks. Everbank’s wire transfer fees range from $6 to $30 per wire, depending on the source or destination of the transfer and the transfer method, while Ally’s outgoing wire transfer fee is $20 per wire.
1. No Checking Account
GE Capital Bank is not a full-service financial institution. The company offers a savings account with a competitive interest rate and 10 distinct CD products, but it doesn’t offer a checking account. Most other online banks, including Ally Bank, Everbank, and GE Capital Retail Bank, do offer high-yield checking accounts with unlimited transaction privileges. Since GE Capital Bank savings account holders can make only six withdrawals per statement period, this seriously limits its customers’ ability to use their accounts to serve everyday financial needs.
2. No IRA Option
Unlike GE Capital Retail Bank, Ally Bank, and Capital One 360, GE Capital Bank doesn’t allow its customers to set up their savings accounts or CDs as IRAs. As such, customers can’t shield savings from federal taxation if they want to use savings for retirement. Those who want to entrust GE Capital with their retirement savings should look to GE Capital Retail Bank instead.
3. No Brokerage
While it’s not common, some online banks operate online brokerages. For instance, Capital One 360 also maintains a brokerage service called Sharebuilder, which enables users to trade stocks, bonds, and other investment vehicles. It also lets users transfer funds freely between brokerage accounts and bank accounts. By contrast, GE Capital Bank isn’t tied to an online brokerage.
4. No Money Market Accounts or Penalty-Free CDs
GE Capital Bank lacks certain account options offered by its direct competitors, including money market accounts (available through Ally, Everbank, GE Capital Retail Bank, and Capital One 360) and no-penalty CDs that enable customers to withdraw funds at any time without incurring an interest penalty (available through Ally Bank).
5. No Direct Relationship With GE Capital Retail Bank
For reasons that remain unclear, and despite their nearly identical names, there are no direct ties between GE Capital Bank and GE Capital Retail Bank. For account holders who’d like to take advantage of the former’s higher interest rates while availing themselves of the latter’s IRA and money market options, this is a big drawback.
6. No Direct Auto, Home, or Business Loans
GE Capital Bank doesn’t offer any loans to its customers. While Ally Bank has a robust auto lending division and Everbank offers mortgages to prospective home buyers, GE Capital Bank is a deposit-only institution.
7. Limited Customer Service Availability
GE Capital Bank’s customer service team is only available by phone on weekdays between 7am and 11pm Central Time. The bank also lacks online chat support, requiring customers to send emails or call during business hours in order to receive customer service. By contrast, Ally Bank offers 24/7 support at its call center, and has an always-on online chat feature in addition to email support.
8. Maximum Balance Limits
While unlikely to affect the average saver, GE Capital Bank does have a maximum account balance of $1 million. Ally’s limit is $1.5 million. Traditional banks, such as Wells Fargo and Citibank, don’t cap deposits until $5 or $10 million, if they cap them at all. However, FDIC insurance only covers the first $250,000 of any account deposit.
9. No Credit or Debit Cards
Unlike Ally Bank and Capital One 360, which offer credit and debit cards for checking and money market accounts, GE Capital Bank doesn’t offer access to credit or debit cards.
GE Capital Bank is truly a savings-only bank offering products designed to protect your money. GE Capital Bank offers attractive interest rates on a suite of savings accounts and CDs. The company’s fees and balance limits are attractive relative to other banks, and its CD laddering options enable clients to craft customized savings plans that keep money safe for years while delivering a modest return. Long-term (six-year) CDs also position GE Capital Bank as a solid choice for savers. Banking clients who want access to a wider range of services and products may prefer GE Capital Retail Bank/Optimizer +Plus, which has no direct ties to GE Capital Bank.
GE Capital Bank has good options for savers looking for CDs and savings accounts. But it lacks other savings and investment products, including a brokerage and IRA options, so it’s not a full-service shop for investors and savers. With no loans or financing options, it disappoints borrowers too.
3 out of 5 stars: If you just want to park your money in CDs or savings accounts for a few years, GE Capital Bank is fine. But a lack of IRA options make it a poor choice for truly long-term savers.
Have you or a family member used GE Capital Bank? Would you recommend any of its accounts or products to a friend?