Today I received a letter from a large credit union (note 1) informing me that my certificate of deposit was up for renewal. I was given six choices at the bottom of a form (note 2) along with a postage-paid return envelope. 

Had I received that letter in 1988, I would have considered it state of the art. But in the modern world of instant communications and researching rates via Google, the communication was inadequate and reflects poorly on the CU's brand:

• No current rate info: I realize that rates are subject to change and are miserably low, but at least tell me what they are today so I have some idea of what's going on. While you are at it, remind me of what my rate was. Avoiding naming the specific rate is a huge red flag that yours is probably not so competitive. Plus, it's irritating when it's obvious how easy it would be to program current rates into the form letter. The CU did at least direct me to its website and call center to find current rates. However, the call center had no main menu option for rates, so you had to guess which number made the most sense. 
• No email/call center option for choosing: The only way to communicate my investment choice is to return a postage-paid envelope. How about an email address, phone number of even a simple URL?
• No email notification: I signed up for this account online, and the bank's marketing messages arrive via email. Why didn't I get an email asking me which option I prefer?
• No clear info on what happens next: According to the fine print buried in the accompanying Truth-in-Savings disclosure, my certificate will automatically renew if I take no action. But nowhere in the main letter does it say that, nor is the deadline for taking action spelled out. The "current maturity date" is provided, but that's using banking lingo that could be clearer.
• No niceties (or even a sales pitch): The letter was bare bones with just two sentences and an info box about my CD (note 3). There was no salutation, no signature, no thank-you, no names of anyone at the CU, no local branch info, no encouragement to renew, and so on. 

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Notes:
1. As previously noted, we generally avoid posting the name of financial institutions that we criticize here; but we'll privately tell readers so long as it's not posted online (email me if you are curious).
2. The choices:
     A. Change term to 6, 12, 24 or 36 months (it was already 12 months, so that was a
          bit confusing, too). 
     B. Deposit to another account with a blank for writing in the account number
         (and no instructions on whether that had to be an account at the CU)
     C. Send a check for the balance (but with no ability to take a partial payout)
3. My CD is small ($500) and was set up online through a now-defunct third-party. So it's very possible that there are different communications sent to larger CD holders, and/or those that were acquired by a specific branch.

TeleBank

www.telebankonline

TeleBank’s interactive savings worksheet.

TeleBank (Arlington, VA; $998 million), which discovered “direct banking” years before it became a hip concept, has put together an excellent deposit-gathering site with the lowest Net-checking prices in cyberspace. The platform is from S1 www.s1.com .

TeleBank has succeeded in adding an interactive twist to plain vanilla CDs and money-market deposit accounts. The company’s Java-based savings worksheet (input screenshot on previous page; output screenshot below) automatically calculates the additional interest your deposit will gain with TeleBank’s rates compared to the average in your state. You can also compare to national averages. Bank Rate Monitor www.bankrate.com provides comparison rates. Comparative rates were slightly stale (two weeks old) when we visited (6/16/98). The worksheet would be more effective with current information.

For any financial institution with above-market rates, comparing yours to national averages is an easy way to demonstrate the competitiveness of your offerings, especially on products like interest-bearing checking where national averages are quite low. The savings, compounded over long time horizons, can be impressive (see screenshot below). Worksheets can be licensed relatively inexpensively from Web developers such as SmartCalc www.smartcalc.com

We think TeleBank’s worksheet would be better if it also allowed users to override the average and input their own rates for comparison. That way it wouldn’t appear as if the bank was “forcing” users to compare only to the rates provided by the bank.

Graphical output from the savings comparison worksheet. The bottom half of the screen graphs the extra interest over 1-year, 5-year, 10-year and 20-year time horizons. It does not take into consideration taxes or time value of money. The bank should consider adding an advanced worksheet that allows for a more sophisticated analysis.

TeleBank’s free CD Maturity Alert Service sends users an email when their CD matures.

TeleBank is one of the few banks to offer a CD Maturity Alert service (see also Canada Trust, OBR 6/97). And they are the first we know of to place it so prominently within its Web site. Users simply enter the amount and maturity date and TeleBank kicks out free email alert (below).
(Note: TeleBank should add “http://” in front of the Web address so that it appears as a live link in newer email programs.)

TeleBank offers free everything to entice potential depositors into its fold.

TeleBank has priced its transaction services as low as you can go: fee-free and APYs tiered from 3.15% to 4.65% (see tables below). You’ll be hard-pressed to compete price-wise with this offering:

TeleBank’s Free Checking*

•  no monthly fee for the checking account
•  no fee for Internet access
•  no fee for UNLIMITED bill pay
•  no fee for printed checks
•  no fee for ATM card
•  first 10 ATM withdrawals free (then $1 each)
•  one of the highest APYs in the nation on checking balances

* The account requires a $2,500 balance to open. Users can sign up online, although the initial deposit must be mailed or wired.

TeleBank is the brainchild of two ex-Wall Street veterans, Mitchell Caplan and David Smilow who purchased Metropolitan Bank in 1989. The bank went branchless and changed its name to TeleBank in 1995 (OBR 10/96). It looks as though the strategy is working. Deposits have grown nearly 50% in the past year, from $413 million on Mar. 31, 1997, to $614 million a year later.

Contact: Mitchell Caplan is President; David Smilow is CEO, (703) 525-7874.

Arkansas National Bank

www.arknatl.com

ANB’s CD quote service.

Arkansas National Bank (Bentonville, AK; $212 million) has developed an innovative way to sell certificates of deposit on its Web. Although it’s not easy to bring interactivity to CDs, they’ve done it with the FlexCD Quote System. Users enter any term from 1 to 60 months, and the bank provides an APY price quote for the desired term.
Contact: Nathaniel Bothwell is Pres. ANB Online, (501) 271-2806.

Federally Insured Savings Network
www.fisn.com

FISN’s ad on Bank Rate Montitor www.bankrate.com

Federally Insured Savings Network (Washington D.C.) is advertising online at Bank Rate Monitor’s Web site (see banner above). FISN, founded in 1983, is a “CD placement” firm, earning 25 basis points on each of the $50 million per month in CDs placed at FDIC-insured banks or thrifts. Its Web contains rates only. Purchases must be made over the phone.
Contact: Thomas M. Coan is Founder/President of FISN, 202.362.0399.