Salem Five is one of more than a dozen banks across the country that have set up separate Internet banking units that offer sharply higher rates for customers willing to bank exclusively online. Banks sometimes do so without telling their customers at traditional branches about the online rates....
Several banks have launched Internet arms as way to attract additional deposits from around the country to help fund and expand their lending, the main way that banks make money. But since they compete with online banks everywhere, they typically must offer higher rates than brick-and-mortar operations, which primarily compete with banks nearby....
Bank executives say they can afford to offer higher rates and lower fees for strictly online customers because they don’t need branches and tellers, eliminating expenses.
And thereby booking more profit.
Most institutions won’t let Internet bank customers use their traditional branches, or they charge extra to do so....
Salem Five never mentions its Internet bank in radio and newspaper ads or signs at its branches. And it’s hard to find any reference to Salem Five Direct on its main website, SalemFive.com.
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Still, traditional customers are stumbling across their banks’ Internet divisions and asking whether they can receive higher rates, as well. When questions come up, Salem Five says, bankers try to find out whether customers still use traditional branches, in which case the bank urges them to stick with traditional accounts.
So the bank will pay you less interest for you being nice enough to let them hold your money.
Most of Salem Five Direct’s customers are outside of Massachusetts....
That's when I withdrew.
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