PurePoint Financial debuts with an eye-popping savings account

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Savers, the wait is over. After years of sub-1 percent savings account returns, a new online bank is on the scene offering an interest rate that pays a whopping five times more than the average account.

PurePoint Financial, an online division of MUFG Union Bank, which operates nearly 400 West Coast branches, debuted last week with several bank accounts, including a savings account that pays 1.25% APY on a minimum deposit of $10,000.

That’s the best nationally available offer, according to Bankrate’s list of top savings accounts.

“We’re targeting power savers,” PurePoint President Pierre Habis says. “Millennials today have a power savings element to them similar to seniors. With the financial crisis of a few years ago, we’ve woken up a new generation of savers.”

‘Benefit from rising interest rates’

With the Federal Reserve likely to raise interest rates this year, a high-yield savings account might be a good place to stash your cash.

“In addition to being able to access your money, liquid accounts like savings accounts and money market deposit accounts enable savers to benefit from rising interest rates. Neither your money nor your interest rate are locked in, which is great news with the Federal Reserve expected to continue raising interest rates in 2017,” says Greg McBride, CFA, Bankrate’s chief financial analyst.

Those rising interest rates mean “if you’re not earning at least 1 percent, you’re doing yourself a disservice,” Habis says.

18-month CD$10,0000.50%1.4%24-month CD$10,0000.48%1.5%36-month CD$10,0000.61%1.65%

PurePoint Financial bank accounts
Account Minimum deposit National average APY APY
Online savings $10,000 0.25% 1.25%
12-month CD $10,000 0.33% 1.4%

The PurePoint offer also is significantly higher than the national average of 0.25 percent APY, according to Bankrate’s latest national survey of banks and thrifts. You’d earn $125 on your minimum deposit during your first year at PurePoint, compared with about $25 on the typical account.

Although the hybrid bank offers better-than-average interest rates, its competitors may not be far behind.

“The place to find a savings account is among the top-yielding, nationally available accounts,” McBride says. “The returns are significantly better, but there is also an arms race among those with the most competitive payouts, and this will benefit savers further as the Federal Reserve raises interest rates.”

How to open an account

Anyone can open an account now online, by phone or in person at one of PurePoint’s financial centers, as long as they have a bank account with a routing number, a Social Security number and a U.S. home address.

The financial centers — which are not traditional bank branches and do not permit cash deposits or withdrawals — are or will be open in Chicago, Dallas, Houston, New York, Tampa and south Florida, with a total of 23 locations by year’s end, Habis says.

“We stripped down all the high costs, there are no tellers, no vaults. We don’t sell checking accounts,” Habis says. “We’ve made a low-cost channel for the benefit of the consumer.”

PurePoint charges no monthly fees, and is insured up to $250,000 by the Federal Deposit Insurance Corp. You can fund your account via bank transfers, mobile deposit, wire transfer or check.

“Everybody needs an emergency savings account, and the most appropriate place to put that money for most people will be in an online savings account. If you have at least $10,000 in savings, a 1.25% return is the head of the savings account class,” McBride says.

CD accounts available, too

PurePoint also offers CDs with four different maturities, but only one tops Bankrate’s list of best CDs available today.

The PurePoint 12-month CD pays 1.4 percent APY with a $10,000 minimum deposit. Compare that with the national average rate of 0.33 percent APY.

PurePoint Financial ownership

Both PurePoint and Union Bank are subsidiaries of Mitsubishi UFJ Financial Group, based in Tokyo. The financial company was ranked as the eighth largest bank in the world in 2016 with $2.32 trillion in assets.