Welcome to ShoreBank, a community development and environmental bank that enjoys a proud heritage of serving Chicago, Cleveland and Detroit. ShoreBank is committed to building stronger communities, creating a healthier environment, and helping its customers achieve financial success. When you bank at ShoreBank, you will experience friendly, expert customer service while also having the satisfaction of knowing that your deposits will have a positive impact in the community.
They've never offered attractive interest rates before, but looks like they are doing so now. I believe you can get 5% interest, plus a $25 bonus, as reported by this article on Bank Deals.
Banks earn money by taking your money and loaning it out to others at higher interest rates. It's a very good business to be in. Typically, the cheapest money for banks is the money in your checking account, and income from fees (the overdraft fees they keep charging you, credit card fees, etc). Another relatively cheap source is money from CDs and online savings accounts. The latter are pretty low maintenance and can get a bank a lot of deposits. Of course, people can also pull their deposits out.
5% is actually above the Federal Funds Rate, so don't expect this to last for long. It's obvious that Shorebank wants deposits. They are also FDIC insured like all banks (credit unions are insured through the NCUA), so if they go bankrupt, your deposits up to $100,000 are insured and will be returned. However, Shorebank's financial condition is also below its peer group (using Bankrate's Safe and Sound rating). They will not be able to sustain that rate for long. However, they're also not a distressed institution.
Bottom line, your money gets loaned out to community development projects. You get 5% for a short time, plus a $25 bonus. Shorebank will likely cut this, and it will be to below the Federal Funds Rate. Their goals are to maximize the economic development of their communities and to operate profitably, so they're not going to give their depositors a free ride. But your money will go to do good.
Please pray for Shorebank and similar banks and credit unions all around the world.
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