BankDirect is an online banking subsidiary of Texas Capital Bank, which bills itself as “the best business bank in Texas.” Despite its provincial parent, BankDirect’s deposit accounts are open to anyone with a U.S. address. All accounts come with FDIC insurance up to $250,000 per account.
Once upon a time, BankDirect’s defining feature was an affiliation with American Airlines’ AAdvantage travel loyalty program. Several of its accounts – including checking, money market, and various CDs – accrued “miles” points that can be redeemed for airfare through American Airlines and its subsidiary airlines.
That’s all in the past, unfortunately. Today, BankDirect’s sister institution, Bask Bank, is the sole keeper of its parent company’s American Airlines mileage rewards program. If you prefer frequent flyer miles to interest, give Bask Bank a look instead.
Lack of mileage rewards notwithstanding, BankDirect does have some depositor-friendly features. But it also has pesky restrictions, such as minimum opening deposit and balance requirements on all accounts, and hard-to-avoid monthly maintenance fees on some accounts. Here’s what you need to know before opening your account.
These are BankDirect’s current account options.
Smart Checking Account
This is your run-of-the-mill checking account. It requires a $100 minimum deposit to open and a $100 minimum balance thereafter. It doesn’t pay interest or come with a monthly maintenance fee. If you need checks, you can request your first order of 50 for free.
Checking with Interest
This account requires a $500 minimum deposit and minimum balance. The $15 monthly maintenance fee is waived if you maintain a daily balance greater than $2,500. Balances greater than $2,500 also earn interest: 0.05% APY on balances up to $10,000, and 0.10% APY on anything above $10,000. Checking with Interest reimburses third-party ATM fees (up to $2.50 per transaction) on up to 4 ATM withdrawals per month.
Money Market Plus Account
This account also requires a $500 minimum deposit and balance. Unusually for a money market account, it doesn’t pay interest on balances less than $10,000. See terms and conditions for current yields on balances above that amount.
There’s no monthly maintenance fee here, but BankDirect does charge $10 per withdrawal if you log more than 6 withdrawals in a given month – the limit for all U.S. money market accounts, not including ATM withdrawals. This account comes with a free ATM card and reimbursement, up to $2.50 per withdrawal, of third-party ATM fees on up to 4 such transactions per month.
Regular Certificates of Deposit
Term lengths on BankDirect’s regular CDs range from 90 days to 60 months. Yields approach 2.00%, though they’re subject to change with prevailing interest rates.
All regular CDs come with a $10,000 minimum opening balance. Early withdrawal penalties range from 30 days’ interest on the 90-day CD, to 180 days’ interest on CDs with terms longer than 12 months.
BankDirect’s savings account has a $100 minimum opening deposit, $100 minimum balance, a 0.10% yield on all balances, and no monthly maintenance fee. Though it doesn’t automatically come with an ATM card, you can request one at no charge. For ATM card holders, BankDirect reimburses 2 monthly withdrawals, up to $2 each. There’s no monthly maintenance fee with this account.
Like money market accounts, savings accounts are also subject to a limit of 6 withdrawal transactions per month, not including ATM withdrawals.
BankDirect offers regular CDs and money market accounts that can be structured as traditional or Roth IRAs. The money market account, which requires a minimum deposit of $100, yields 0.10% on balances up to $10,000, and 0.15% on anything above $10,000.
CD terms range from 12 to 60 months, all yielding 0.25% on all balances. These IRA CD yields are significantly lower than many of BankDirect’s competitors.
Additional Features and Products
BankDirect has some additional features and products worth noting.
BankDirect has a 24-hour, password-protected, automated telephone banking system that you can use to check balances and make basic modifications (such as PIN changes) to your accounts. Human customer support associates are reachable by phone from 8am to 6pm Central Standard Time, Monday through Friday.
BankDirect’s opt-in overdraft protection plan allows you to make transactions that result in a negative account balance. There’s a one-time fee of $38 for this service. If you don’t opt-in, transactions that would normally trigger overdraft protection simply fail.
BankDirect offers commercial financing for small and medium-sized businesses through an affiliate called BankDirect Capital Finance. BankDirect customers don’t automatically qualify for Capital Finance’s loans and lines of credit – you need to contact the affiliate directly. The term, principal, and rates on each loan and line of credit are customized based on the client’s financing needs and credit profile.
BankDirect’s key advantages include the following.
1. CD Yields Are Better Than Some Competitors
Though BankDirect’s CD yields aren’t the best in the business, they’re definitely better than some other popular online banks. For instance, the 36-month CD’s yield exceeds that of identical CDs available through TIAA Bank and TIAA Direct.
2. Has Several IRA Options
BankDirect has special CDs and money market accounts structured as traditional and Roth IRAs. This is a nice perk if you’re looking to place some of your retirement savings in an insured account with a predictable yield. Some competing banks, such as FNBO Direct and BAC Florida Bank, don’t offer any retirement options.
3. Commercial Financing Available
BankDirect offers customers access to commercial financing through BankDirect Capital Finance. Though not all customers qualify for this perk, it’s certainly nice to have the option if you’re a small business owner who already does business with BankDirect. Other popular online banks, including FNBO Direct and Ally, don’t offer commercial financing options.
These are BankDirect’s principal disadvantages.
1. Savings and Money Market Yields Are Paltry
BankDirect’s savings account yields a paltry 0.10% on all balances. The money market is arguably even worse, yielding 0.15% only on balances above $10,000. It bears noting that these yields haven’t budged since the early 2010s.
If you want greater yields on BankDirect’s savings products, you need to look to its traditional CDs. However, if you prefer less restrictive savings and money market accounts that pay cash, other banks (such as TIAA Bank) are more attractive.
2. Maintenance Fees May Be Tough to Avoid
Some BankDirect accounts come with hard-to-avoid maintenance fees. In some cases, they’re impossible to avoid. If you’d prefer not to worry about maintenance fees at all, no-fee accounts at Ally Bank and other competitors may be a better choice.
3. No Mobile App or Mobile-Friendly Website
BankDirect doesn’t offer a mobile app, nor does it have a particularly mobile-friendly website. This is definitely a disadvantage for people who prefer to do their banking from a mobile device, and places BankDirect in a distinct minority of online and traditional banks that haven’t yet made the leap to mobile.
4. High Minimum Balance Is Problematic for CDs
BankDirect imposes a steep minimum balance requirement for regular CDs: $10,000. This is particularly problematic for regular CDs, which have good but not world-beating yields. Other banks, including Ally and FNBO Direct, don’t impose such an onerous minimum deposit on regular CDs.
5. No Consumer Loans or Credit Cards
Though it does offer commercial financing options through BankDirect Capital Finance, BankDirect has no consumer credit infrastructure. If you need a home loan, auto loan, or cash back credit card, you need to look elsewhere. This is a disadvantage relative to better-known online banks, including Ally Bank (known for auto loans) and Capital One 360 (known for mortgages and credit cards).
6. Limited Customer Support Hours
BankDirect’s customer support team is only available on weekdays during extended business hours. If an account issue that requires human attention arises over the weekend or late at night, you need to wait hours or days for help. By contrast, other online banks such as FNBO Direct and Ally have 24/7 support, often with minimal wait times.
7. IRA CD Rates Are Much Lower Than the Competition’s
BankDirect’s IRA CD rates pale in comparison to IRA CDs found elsewhere. It’s unclear why you’d want to open a BankDirect IRA CD when there are better alternatives.
Compromise is a fact of life – and, in some cases, online banking. BankDirect’s mileage program was an awesome perk for the bank’s customers, but it’s in the rearview mirror now. Here’s to hoping that BankDirect refocuses its offerings on higher-yielding cash deposit products capable of competing with the best online banks around.
Are you thinking about opening a BankDirect account?