HM Bradley - is it safe - FDIC response

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inspireone
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HM Bradley - is it safe - FDIC response

Post by inspireone »

Hello all,

I have been reading a lot in this forum and thanks for pointing to a wealth of information. One was HM Bradley.

I was intrigued by their interest rate and i read that they are using another bank for FDIC insurance.

Wanted to check with FDIC before I moved my cash saving there and below is the response I got. From the response I couldnt make out of its FDIC insured or not. What do you make of it?

*******


HM Bradley is not an FDIC-insured bank and the FDIC cannot verify where HM Bradley holds client funds, whether there is a delay in transferring funds to an FDIC-insured bank, or if HM Bradley even deposit 100% of client funds at FDIC-insured banks. It appears that HM Bradley is acting as an intermediary. As much, if an intermediary, such as a broker or agent, properly establish a fiduciary account at a FDIC-insured bank that satisfies the FDIC’s “pass-through” insurance requirements, then each HM Bradley client would be FDIC-insured up to $250,000 once the funds were actually on deposit at the FDIC insured bank (such as Hatch Bank). The FDIC’s pass-through insurance requirements are as follows:

1) Your funds are actually on deposit at an FDIC-member bank;
2) The bank's records indicate the fiduciary nature of the account. This is usually accomplished with an account title such "HM Bradley for the benefit of Sally Smith (customer's name)" or "ABC Co., as agent" or "ABC Co., as custodian;"
3) The funds on deposit belong to the client(s)/principal(s) and not to the account holder/agent. To verify ownership, the FDIC may review the contract between the agent and client along with relevant state law; and,
4) Records maintained at the bank or by the account holder (e.g. ABC Co.) identify the underlying deposit owner(s) and their ownership interest in the account.

In the unlikely event of a bank failure, the FDIC reviews bank records and records held by fiduciaries in order to identify deposit owners and determine their deposit insurance limit. At that point in time, the FDIC would determine if brokers, agents, and other intermediaries (such as HM Bradley) have met the FDIC’s pass-through insurance requirements. If so, the FDIC can rely on the intermediary’s business records to identify depositors and the amount of funds they have on deposit at the failed institution. Assuming the pass-through deposit insurance rules are met, the FDIC would make a deposit insurance determination as to each of the principal owners identified in the records. The FDIC would then transfer the insured funds to the broker or agent that established the bank account. It would then be the responsibility of the broker or agent to provide access to these insured funds.

If you wish to learn more about FDIC deposit insurance coverage, please visit the Deposit Insurance page on our website where you will find our brochure, "Your Insured Deposits" which explains in detail all of the deposit insurance ownership categories. You can also visit EDIE, our electronic estimator, where you can calculate the insurance coverage of your accounts. These and other deposit insurance resources can be accessed directly by clicking the following link: http://www.fdic.gov/deposit.

Sincerely,

Federal Deposit Insurance Corporation
Division of Depositor and Consumer Protection
550 17th Street, N.W.
Washington, DC 20429

Please note that our response to your deposit insurance coverage inquiry is based strictly on the information provided, and any change or omission in the facts or failure to comply with FDIC's deposit insurance requirements could change the deposit insurance coverage discussed in this response.
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JoMoney
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Re: HM Bradley - is it safe - FDIC response

Post by JoMoney »

It sounds to me like there's additional risks when dealing with an intermediary like HM Bradley.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
invest4
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Re: HM Bradley - is it safe - FDIC response

Post by invest4 »

I believe the prevailing view is that it is probably ok...until it isn’t. Personally, I do not feel comfortable investing monies in this setup. YMMV
MrJedi
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Re: HM Bradley - is it safe - FDIC response

Post by MrJedi »

I have an account with them. The routing number I use to direct deposit and ACH funds in and out is directly through Hatch Bank, which is registered on FDIC. Also the 1099-INT I received was directly from Hatch Bank as well. Hatch Bank website directly mentions HMBradley and the Fintech platform offered via API. This seems like HMB is legitimately a direct interface to Hatch, and the funds seem to be truly held at Hatch.

Just my opinion and observation.
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Wiggums
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Re: HM Bradley - is it safe - FDIC response

Post by Wiggums »

HMBradley says, “ All your money is safe with HMBradley. Every deposit account is opened and maintained with Hatch Bank, Member FDIC, and is insured up to $250,000 per depositor. With timely notification, our HMBradley Mastercard debit or credit card are both protected by Mastercard's Zero Liability Protection.”

Maybe there are scenarios between HMBradley and Hatch bank, that would not be FDIC insured. I don’t know.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

Wiggums wrote: Sun May 16, 2021 9:57 pm HMBradley says, “ All your money is safe with HMBradley. Every deposit account is opened and maintained with Hatch Bank, Member FDIC, and is insured up to $250,000 per depositor. With timely notification, our HMBradley Mastercard debit or credit card are both protected by Mastercard's Zero Liability Protection.”

Maybe there are scenarios between HMBradley and Hatch bank, that would not be FDIC insured. I don’t know.
Wouldn't a problem occur if HMBradley never properly transfered the funds to Hatch bank, then went out of business? How would you get your money back? Remember Beam Financial? They supposedly used a network of FDIC insured banks to keep poeple's money, but then wouldn't let people withdraw their money...
https://www.cnbc.com/2020/10/28/beam-pr ... -back.html
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Wiggums
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Re: HM Bradley - is it safe - FDIC response

Post by Wiggums »

I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.

It's not a 3% account, it's an up to 3% account. One must jump through hoops.
Last edited by Wiggums on Sun May 16, 2021 10:16 pm, edited 1 time in total.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

Wiggums wrote: Sun May 16, 2021 10:10 pm I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.
There lies the problem, I don't think there is anyway to verify the money really got to Hatch Bank, you have to trust HMBradley... Sure you can sue them, but if they close up shop you may be SOL.

I like I Bonds right now, 3.54% and backed by the US Treasury.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Sun May 16, 2021 10:06 pm
Wiggums wrote: Sun May 16, 2021 9:57 pm HMBradley says, “ All your money is safe with HMBradley. Every deposit account is opened and maintained with Hatch Bank, Member FDIC, and is insured up to $250,000 per depositor. With timely notification, our HMBradley Mastercard debit or credit card are both protected by Mastercard's Zero Liability Protection.”

Maybe there are scenarios between HMBradley and Hatch bank, that would not be FDIC insured. I don’t know.
Wouldn't a problem occur if HMBradley never properly transfered the funds to Hatch bank, then went out of business? How would you get your money back? Remember Beam Financial? They supposedly used a network of FDIC insured banks to keep poeple's money, but then wouldn't let people withdraw their money...
https://www.cnbc.com/2020/10/28/beam-pr ... -back.html
My impression of Beam is they didn't provide you a bank routing number/account - so your only option was to work directly with Beam.

As was mentioned by a previous poster - you get a direct routing/account number to Hatch - and can deposit and withdraw money directly to/from Hatch bank - without using HMBradely. (Although you need to "open" the account through HMBradely.)

My main concerns with HMBradely are the type of account used (can't recall the name - but it basically gives them the right to sequence withdrawals even requiring written request to get the funds) and if this model is sustainable (and I don't mean the 3% interest explicitly as I suspect that will change over time, but if they've found a way to provide a lower cost/higher interest rate - and as such will maintain a higher interest rate than the market rate over time).

That said, I've opened my account, and am putting some of my savings into Hatch. I still keep 1-2 months expenses in my primary checking/savings account - so in the unlikely event there is an issue accessing funds in HMBradely - I'll have a buffer. But I'll happily accept the higher interest rate for any "cash" I keep beyond that.
mhop
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Re: HM Bradley - is it safe - FDIC response

Post by mhop »

anon_investor wrote: Sun May 16, 2021 10:14 pm
Wiggums wrote: Sun May 16, 2021 10:10 pm I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.
There lies the problem, I don't think there is anyway to verify the money really got to Hatch Bank, you have to trust HMBradley... Sure you can sue them, but if they close up shop you may be SOL.

I like I Bonds right now, 3.54% and backed by the US Treasury.
Sure there is. As stated above, your direct deposit details are for Hatch. With a bank account that acts like a hub, such as Ally, it’s 100% possible to be an HMBradley user and never use their application to send or receive money.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

mhop wrote: Sun May 16, 2021 10:24 pm
anon_investor wrote: Sun May 16, 2021 10:14 pm
Wiggums wrote: Sun May 16, 2021 10:10 pm I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.
There lies the problem, I don't think there is anyway to verify the money really got to Hatch Bank, you have to trust HMBradley... Sure you can sue them, but if they close up shop you may be SOL.

I like I Bonds right now, 3.54% and backed by the US Treasury.
Sure there is. As stated above, your direct deposit details are for Hatch. With a bank account that acts like a hub, such as Ally, it’s 100% possible to be an HMBradley user and never use their application to send or receive money.
Can a HMBradley user contact Hatch Bank directly to verify their balance? My concern would be if money never actually got to Hatch Bank.
mhop
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Re: HM Bradley - is it safe - FDIC response

Post by mhop »

anon_investor wrote: Sun May 16, 2021 10:28 pm
mhop wrote: Sun May 16, 2021 10:24 pm
anon_investor wrote: Sun May 16, 2021 10:14 pm
Wiggums wrote: Sun May 16, 2021 10:10 pm I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.
There lies the problem, I don't think there is anyway to verify the money really got to Hatch Bank, you have to trust HMBradley... Sure you can sue them, but if they close up shop you may be SOL.

I like I Bonds right now, 3.54% and backed by the US Treasury.
Sure there is. As stated above, your direct deposit details are for Hatch. With a bank account that acts like a hub, such as Ally, it’s 100% possible to be an HMBradley user and never use their application to send or receive money.
Can a HMBradley user contact Hatch Bank directly to verify their balance? My concern would be if money never actually got to Hatch Bank.
Not sure this is a very valid fear. You would have heard of issues by now. But for that, yes you’d want to use the app as HMBradley services the account, and people seem to have pretty good interactions with their support. I update my spreadsheet at the end of the month - if something happens after that I can add a paycheck or two to the balance and initiate a transfer out. There’s a daily limit on the withdrawals if you excute them from within the HMBradley app, but according to reports that is not the case if pulled from an external.
typical.investor
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Re: HM Bradley - is it safe - FDIC response

Post by typical.investor »

SnowBog wrote: Sun May 16, 2021 10:20 pm
anon_investor wrote: Sun May 16, 2021 10:06 pm
Wiggums wrote: Sun May 16, 2021 9:57 pm HMBradley says, “ All your money is safe with HMBradley. Every deposit account is opened and maintained with Hatch Bank, Member FDIC, and is insured up to $250,000 per depositor. With timely notification, our HMBradley Mastercard debit or credit card are both protected by Mastercard's Zero Liability Protection.”

Maybe there are scenarios between HMBradley and Hatch bank, that would not be FDIC insured. I don’t know.
Wouldn't a problem occur if HMBradley never properly transfered the funds to Hatch bank, then went out of business? How would you get your money back? Remember Beam Financial? They supposedly used a network of FDIC insured banks to keep poeple's money, but then wouldn't let people withdraw their money...
https://www.cnbc.com/2020/10/28/beam-pr ... -back.html
My impression of Beam is they didn't provide you a bank routing number/account - so your only option was to work directly with Beam.

As was mentioned by a previous poster - you get a direct routing/account number to Hatch - and can deposit and withdraw money directly to/from Hatch bank - without using HMBradely. (Although you need to "open" the account through HMBradely.)

My main concerns with HMBradely are the type of account used (can't recall the name - but it basically gives them the right to sequence withdrawals even requiring written request to get the funds) and if this model is sustainable (and I don't mean the 3% interest explicitly as I suspect that will change over time, but if they've found a way to provide a lower cost/higher interest rate - and as such will maintain a higher interest rate than the market rate over time).

That said, I've opened my account, and am putting some of my savings into Hatch. I still keep 1-2 months expenses in my primary checking/savings account - so in the unlikely event there is an issue accessing funds in HMBradely - I'll have a buffer. But I'll happily accept the higher interest rate for any "cash" I keep beyond that.
I have two simple questions:

1) How is HM Bradley able to offer 3% on deposits at Hatch if Hatch is not paying that much?

2) Is the HM Bradley ability to sequence withdrawals an indication that they are using a portion of that money outside of the Hatch account in order to generate higher returns.

But out of curiosity I looked at their account agreement which by definition designates an Account or HM Bradley Account as a Negotiable Order of Withdrawal (NOW) account. And note the FDIC considers such an account protected.

https://policies.hmbradley.com/deposit/ ... eement.pdf

https://www.fdic.gov/deposit/covered/notinsured.html
Last edited by typical.investor on Sun May 16, 2021 10:56 pm, edited 1 time in total.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

mhop wrote: Sun May 16, 2021 10:35 pm
anon_investor wrote: Sun May 16, 2021 10:28 pm
mhop wrote: Sun May 16, 2021 10:24 pm
anon_investor wrote: Sun May 16, 2021 10:14 pm
Wiggums wrote: Sun May 16, 2021 10:10 pm I don’t have an account with HMBradley, but if money given to HMBradley is never deposited at Hatch bank, that would be a problem.
There lies the problem, I don't think there is anyway to verify the money really got to Hatch Bank, you have to trust HMBradley... Sure you can sue them, but if they close up shop you may be SOL.

I like I Bonds right now, 3.54% and backed by the US Treasury.
Sure there is. As stated above, your direct deposit details are for Hatch. With a bank account that acts like a hub, such as Ally, it’s 100% possible to be an HMBradley user and never use their application to send or receive money.
Can a HMBradley user contact Hatch Bank directly to verify their balance? My concern would be if money never actually got to Hatch Bank.
Not sure this is a very valid fear. You would have heard of issues by now. But for that, yes you’d want to use the app as HMBradley services the account, and people seem to have pretty good interactions with their support. I update my spreadsheet at the end of the month - if something happens after that I can add a paycheck or two to the balance and initiate a transfer out. There’s a daily limit on the withdrawals if you excute them from within the HMBradley app, but according to reports that is not the case if pulled from an external.
I am not saying that will happen, but pointing out that is a possible situation, and that appears to have happened with Bean Financial, which appears similar.

I wonder how long they can keep up 3%, even Toyota Drivers Notes just dropped their rate from 1.5% to 1.3%.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

typical.investor wrote: Sun May 16, 2021 10:39 pm
I have two simple questions:

1) How is HM Bradley able to offer 3% on deposits at Hatch if Hatch is not paying that much?

2) Is the HM Bradley ability to sequence withdrawals an indication that they are using a portion of that money outside of the Hatch account in order to generate higher returns.
Haha, they are buying Dogecoin... :twisted:
typical.investor
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Re: HM Bradley - is it safe - FDIC response

Post by typical.investor »

anon_investor wrote: Sun May 16, 2021 10:44 pm
typical.investor wrote: Sun May 16, 2021 10:39 pm
I have two simple questions:

1) How is HM Bradley able to offer 3% on deposits at Hatch if Hatch is not paying that much?

2) Is the HM Bradley ability to sequence withdrawals an indication that they are using a portion of that money outside of the Hatch account in order to generate higher returns.
Haha, they are buying Dogecoin... :twisted:
On second review ... the HM Bradley agreement defines the account as a type FDIC says it insures and HM Bradley requires you to write "for mobile deposit only at Hatch bank" so I think the money will get there.

I'm not sure what their revenue stream is but maybe it's from selling your info.

Per their agreement:

We may make personal identifying information available: (1) when ordered by a court or other legal authority or when it is lawfully permitted or required; (2) when we provide information pursuant to contracts with vendors and partners to make products and services available to our customers (and for no other purpose); or (3) when you request or consent to the disclosure of information.

I am not sure how to interpret that.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

typical.investor wrote: Sun May 16, 2021 11:17 pm
anon_investor wrote: Sun May 16, 2021 10:44 pm
typical.investor wrote: Sun May 16, 2021 10:39 pm
I have two simple questions:

1) How is HM Bradley able to offer 3% on deposits at Hatch if Hatch is not paying that much?

2) Is the HM Bradley ability to sequence withdrawals an indication that they are using a portion of that money outside of the Hatch account in order to generate higher returns.
Haha, they are buying Dogecoin... :twisted:
On second review ... the HM Bradley agreement defines the account as a type FDIC says it insures and HM Bradley requires you to write "for mobile deposit only at Hatch bank" so I think the money will get there.

I'm not sure what their revenue stream is but maybe it's from selling your info.

Per their agreement:

We may make personal identifying information available: (1) when ordered by a court or other legal authority or when it is lawfully permitted or required; (2) when we provide information pursuant to contracts with vendors and partners to make products and services available to our customers (and for no other purpose); or (3) when you request or consent to the disclosure of information.

I am not sure how to interpret that.
I assume #2 (thanks for looking it up - the NOW account type) is to avoid them needing to deal with actual "checks" - and maybe a more efficient (but less common) type of account.

On #1 - not sure... But I have a few thoughts:
  • I suspect "most" people won't qualify for their 3% rate - as it requires saving 20% of deposits - and seemingly - most people in the USA simply don't save that much... (Granted - those of us on BH are probably more likely to sustain a 3% rate...)
  • They are in venture capital/start-up mode - where many investors accept "loses" if it means rapidly growing the overall business. Think about how long companies like Amazon, Telsa, Uber, etc. failed to turn a profit - as they were building out and "re-investing" in the business.
  • This is a "loss leader" into other more profitable areas. For example, if you opt into their "one-click credit" piece - if you meet their criteria - they'll extend a credit card offer (which ends up bringing your savings to 3.5% when at tier 1 with $100/monthly credit spend). Maybe there are other/similar "plans" to offer other services in the future - and they just need enough critical mass to move those forward...
  • "Maybe" they've found a more efficient model - with lower overhead - thus they can return a higher % interest (big banks have more payroll, infrastructure, etc. they need to pay for...)
  • Maybe they make revenue on the backside - by partnering with Hatch and seeing the money invested in some other way... (For clarity - anyone that thinks their money is sitting idle in a bank doesn't understand how banking works.)
  • Maybe they have yet unknown revenue sources...
But to some extent, the same could be said for Ally paying out more than the national average, or the numerous small banks/credit unions who are paying out more than the national average (some of them also 3% - but on much smaller amounts and with lots of hoops [like X monthly ATM usage/etc.])

They way I figure it - it appears my money is "safe" (within FDIC limits) at Hatch bank. I'm hoping they've found (or will find) a way to sustain this long term, maybe even drive others to offer a similar model (IMHO like Robinhood pushing the $0 commission trades - which others ended up following) over time.

I'm not saying they are risk-less (nothing is in life) - but I think the risk is small enough that I'm OK putting some of our unused cash (that I don't need to immediately access - in a "worse case") here to earn higher interest.
MrJedi
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Re: HM Bradley - is it safe - FDIC response

Post by MrJedi »

They have gotten multiple rounds of venture capital.

Also I recall reading last year that one of the strategies would be to get people on the credit card, which will be profitable.
Last edited by MrJedi on Mon May 17, 2021 7:00 am, edited 1 time in total.
hudson
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Re: HM Bradley - is it safe - FDIC response

Post by hudson »

Hatch bank's website doesn't show any personal banking services or CD rates that I can see. Hatch's website says, "Companies like Wisetack and HMBradley offer loans, credit cards, and digital bank accounts for regular people that are all Powered by Hatch."

https://www.hatchbank.com/

HM Bradley isn't on the FDIC list.
There's also a cell phone company...T-Mobile... that offers attractive interest rates that partners with a bank.
I speculate that HM Bradley makes money to pay the 3% somewhere else besides banking.

Didn't Bernie Madoff put $64B in an FDIC bank?
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JoMoney
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Re: HM Bradley - is it safe - FDIC response

Post by JoMoney »

hudson wrote: Mon May 17, 2021 4:46 am...
Didn't Bernie Madoff put $64B in an FDIC bank?
I don't think that's the case, $64B is roughly the amount he claimed to have in various stock market investments.
Although JP Morgan did wind up paying out some sort of settlement in the scandal, related to failing to report the suspicious activity
https://www.foxbusiness.com/features/u- ... ff-scandal
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

SnowBog wrote: Mon May 17, 2021 12:10 am I'm not saying they are risk-less (nothing is in life) - but I think the risk is small enough that I'm OK putting some of our unused cash (that I don't need to immediately access - in a "worse case") here to earn higher interest.
And I should add, relative to the crypto threads on here of late, I think HMBradley/Hatch is far safer than all the alt coins/crypto holdings. If you ask the same question on "how they are paying out"...
index2max
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Re: HM Bradley - is it safe - FDIC response

Post by index2max »

This is why I recommend people take advantage of 3%+ accounts at credit unions offering nationwide signup. To sweeten the deals, have your spouse sign up for their own accounts too (you can be joint on those too). This way you're dealing directly with the financial institution.

Checking (with debit transactions):

1. Evansville CU

3.3% up to $20,000

2. Lake Michigan CU

3% up to $15,000

Savings (no debit transactions required)

3. Service CU

5% up to $500 in primary savings

3% up to $3000 in holiday club savings

4. Digital CU

6.17% up to $1000 in primary savings

5. Blue FCU

5% up to $1000 in accelerated savings
hudson
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Re: HM Bradley - is it safe - FDIC response

Post by hudson »

JoMoney wrote: Mon May 17, 2021 7:58 am
hudson wrote: Mon May 17, 2021 4:46 am...
Didn't Bernie Madoff put $64B in an FDIC bank?
I don't think that's the case, $64B is roughly the amount he claimed to have in various stock market investments.
Although JP Morgan did wind up paying out some sort of settlement in the scandal, related to failing to report the suspicious activity
https://www.foxbusiness.com/features/u- ... ff-scandal
Thanks JoMoney for the link and the information!
Bottom Line: If HM Bradley fails, will everybody get their money back? Does the partner bank guarantee all HM Bradley deposits?
nolesrule
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Re: HM Bradley - is it safe - FDIC response

Post by nolesrule »

hudson wrote: Mon May 17, 2021 12:29 pm
JoMoney wrote: Mon May 17, 2021 7:58 am
hudson wrote: Mon May 17, 2021 4:46 am...
Didn't Bernie Madoff put $64B in an FDIC bank?
I don't think that's the case, $64B is roughly the amount he claimed to have in various stock market investments.
Although JP Morgan did wind up paying out some sort of settlement in the scandal, related to failing to report the suspicious activity
https://www.foxbusiness.com/features/u- ... ff-scandal
Thanks JoMoney for the link and the information!
Bottom Line: If HM Bradley fails, will everybody get their money back? Does the partner bank guarantee all HM Bradley deposits?
The accounts are FDIC insured. Are you suggesting the money shown in the accounts isn't really in the accounts? I would think we'd all have transaction records of the direct deposits and bank transfers and so would the banking system.
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patrick013
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Re: HM Bradley - is it safe - FDIC response

Post by patrick013 »

Image

I think the minimum requirement has been met where Bradley has stated the accounts are
held at Hatch Bank.
age in bonds, buy-and-hold, 10 year business cycle
hudson
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Re: HM Bradley - is it safe - FDIC response

Post by hudson »

nolesrule and patrick013,

Does your money go straight to Hatch bank and straight from Hatch Bank; or does it go to HM Bradley first.
What can an account holder see? Just Hatch? just HM Bradley? both?
Does the interest show up in a Hatch bank account?
I wonder what happens in the background.
How does HM Bradley earn money to pay the interest?
Are the answers to these questions in the open and easy to find? Or do you have to dig into the fine print?
I have a good feel for how regular banks and credit unions work. I feel like my money is safe.
I just don't know about these other places that pay 3% and advertise FDIC protection through partners. I haven't heard enough to have confidence.
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patrick013
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Re: HM Bradley - is it safe - FDIC response

Post by patrick013 »

hudson wrote: Mon May 17, 2021 1:57 pm nolesrule and patrick013,

Does your money go straight to Hatch bank and straight from Hatch Bank; or does it go to HM Bradley first.
What can an account holder see? Just Hatch? just HM Bradley? both?
Does the interest show up in a Hatch bank account?
I wonder what happens in the background.
How does HM Bradley earn money to pay the interest?
Are the answers to these questions in the open and easy to find? Or do you have to dig into the fine print?
I have a good feel for how regular banks and credit unions work. I feel like my money is safe.
I just don't know about these other places that pay 3% and advertise FDIC protection through partners. I haven't heard enough to have confidence.
The money is at Hatch and all records have your name on it. It could
be a little more clear and detailed but like most things sometimes aren't.

Companies called Fintech providers are providing services like Bradley this
one which appears to be just a website for Hatch where certain services
are provided to customers for a fee from Hatch.

If I think Hatch's FDIC documents should clearly mention HMBradley but
do not.
age in bonds, buy-and-hold, 10 year business cycle
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

index2max wrote: Mon May 17, 2021 12:04 pm This is why I recommend people take advantage of 3%+ accounts at credit unions offering nationwide signup. To sweeten the deals, have your spouse sign up for their own accounts too (you can be joint on those too). This way you're dealing directly with the financial institution.

Checking (with debit transactions):

1. Evansville CU

3.3% up to $20,000

2. Lake Michigan CU

3% up to $15,000

Savings (no debit transactions required)

3. Service CU

5% up to $500 in primary savings

3% up to $3000 in holiday club savings

4. Digital CU

6.17% up to $1000 in primary savings

5. Blue FCU

5% up to $1000 in accelerated savings
To me, this proves "its possible" to provide a 3% rate in the current environment. If Hmbradley.com was the only one offering this rate, I'd be more concerned.

But since there are a handful of entities doing this, and Hmbradley.com allows the largest balance with IMHO the least amount of loops (and to the best as I can tell deposits are covered by FDIC), that works for me...

Again, nothing in life is risk less. But my impression is I'll get my money back. Maybe some delays, but I've seen nothing that makes me think I'm not covered by FDIC.
investuntilimrich
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Re: HM Bradley - is it safe - FDIC response

Post by investuntilimrich »

Sounds too messy for my tastes.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

investuntilimrich wrote: Mon May 17, 2021 2:30 pm Sounds too messy for my tastes.
I used to think the same thing at one point regarding all "online banks"... I wanted to be able to walk in and talk to a person... But I decided moving from 0.1% interest to something better was worth it...

And the great part, we have lots of choices, so people are free to pick and use what works for them! (And ignore what doesn't.)
MrJedi
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Re: HM Bradley - is it safe - FDIC response

Post by MrJedi »

hudson wrote: Mon May 17, 2021 1:57 pm nolesrule and patrick013,

Does your money go straight to Hatch bank and straight from Hatch Bank; or does it go to HM Bradley first.
What can an account holder see? Just Hatch? just HM Bradley? both?
Does the interest show up in a Hatch bank account?
I wonder what happens in the background.
How does HM Bradley earn money to pay the interest?
Are the answers to these questions in the open and easy to find? Or do you have to dig into the fine print?
I have a good feel for how regular banks and credit unions work. I feel like my money is safe.
I just don't know about these other places that pay 3% and advertise FDIC protection through partners. I haven't heard enough to have confidence.
The routing number I use for direct deposit and and ACH transfers in/out is directly to Hatch. So when I push funds in from another bank, it says it's going directly to Hatch Bank. There is no extra transfer needed (unlike the infamous Beam debacle where you deposited but then initiated a secondary transfer to the high yield account that was only accessible through the app).

The 1099-INT I received was also directly from Hatch.

As for how they are paying it, they've gotten multiple rounds of venture capital. Of course they will eventually dry up. I believe are attracting deposits so they they can offer more credit cards which would be actually profitable.
JBTX
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

MrJedi wrote: Sun May 16, 2021 9:52 pm I have an account with them. The routing number I use to direct deposit and ACH funds in and out is directly through Hatch Bank, which is registered on FDIC. Also the 1099-INT I received was directly from Hatch Bank as well. Hatch Bank website directly mentions HMBradley and the Fintech platform offered via API. This seems like HMB is legitimately a direct interface to Hatch, and the funds seem to be truly held at Hatch.

Just my opinion and observation.
Same. Every transaction documentation says Hatch bank. When I transfer money there from another bank the transaction description says Hatch Bank.
hudson
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Re: HM Bradley - is it safe - FDIC response

Post by hudson »

Thanks MrJedi and JBTX!
Useful information!
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

ETA - I'm not sure if this is universal, or only applies to the "boost" from having the credit card (which could raise the rate from 3.0% -> 3.5%)...
Edit 2 - I'm pretty sure this reflects the extra 0.5% "boost" with their credit card... They use your DD amount to estimate your income, and I'd heard $2500/month was usually the minimum to qualify for the CC... So it maybe makes sense that you'd need to sustain a $2500/monthly DD to get the boost... But curious if others got the same message and/or understand it differently...

Just an FYI, I got an email earlier today, sounds like starting in Q4 (Oct.) to qualify for the higher savings you'll need at least $2500 per month in direct deposits.
To qualify for the Savings Tier Boost in the fourth calendar quarter of 2021 (beginning October 1, 2021) and onwards, you’ll need to have recurring direct deposits totaling at least $2,500 into your HMBradley Deposit Account each month during the previous calendar quarter. Also, you will continue to need to spend at least $100 on your HMBradley Credit Card each billing period.
That's going to make this far less attractive for people, as you'll need to have DD of $2500/month, which essentially is forcing this to be your primary bank account (or you get a really large paycheck).
Last edited by SnowBog on Tue May 25, 2021 4:03 pm, edited 2 times in total.
BogleMelon
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Re: HM Bradley - is it safe - FDIC response

Post by BogleMelon »

Fidelity is doing the same thing with their CMA account. You will get a routing number that is for UMB bank. Except, there is no offering for such saving rate. I am not saying that HMBardley are safe or not. Just a similar business model I guess
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JBTX
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

I figured it would change sooner or later. I wonder come Q4 if you could direct deposit the new amount each month the pull out an amount each month that is slightly less? A bit more hoops but still doable.

Or perhaps just start pulling the mortgage payment from it each month.
JBTX
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

SnowBog wrote: Tue May 25, 2021 3:36 pm ETA - I'm not sure if this is universal, or only applies to the "boost" from having the credit card (which could raise the rate from 3.0% -> 3.5%)...
Edit 2 - I'm pretty sure this reflects the extra 0.5% "boost" with their credit card... They use your DD amount to estimate your income, and I'd heard $2500/month was usually the minimum to qualify for the CC... So it maybe makes sense that you'd need to sustain a $2500/monthly DD to get the boost... But curious if others got the same message and/or understand it differently...

Just an FYI, I got an email earlier today, sounds like starting in Q4 (Oct.) to qualify for the higher savings you'll need at least $2500 per month in direct deposits.
To qualify for the Savings Tier Boost in the fourth calendar quarter of 2021 (beginning October 1, 2021) and onwards, you’ll need to have recurring direct deposits totaling at least $2,500 into your HMBradley Deposit Account each month during the previous calendar quarter. Also, you will continue to need to spend at least $100 on your HMBradley Credit Card each billing period.
That's going to make this far less attractive for people, as you'll need to have DD of $2500/month, which essentially is forcing this to be your primary bank account (or you get a really large paycheck).
I went online and chatted with a rep, and I think it applies to the boost. She said she is not aware of any planned interest rate change.

I asked her about credit cards and to qualify you have to demonstrate at least $35k gross income per year to qualify for the card. You demonstrate income via your direct deposits, which are assumed to be net of taxes. So $2500 per month may demonstrate approximately $35k of income.

I have seen no offers for me for the credit card, but I only DD $25 per week.

This seems to be the case now, so not sure where the Q4 comes from.

As to the OP, I asked are my deposits FDIC insured and she said yes, accounts are provided by Hatch bank that is FDIC insured.
Escapevelocity
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Re: HM Bradley - is it safe - FDIC response

Post by Escapevelocity »

I was able to qualify for the credit card with a 2500 monthly direct deposit. YMMV.
ball241
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Re: HM Bradley - is it safe - FDIC response

Post by ball241 »

If routing number is Hatch and account is through Hatch. Why would this not be FDIC insured? All deposits are immediately held at Hatch, it’s not possible any other way as that is the routing number used
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

ball241 wrote: Tue May 25, 2021 8:44 pm If routing number is Hatch and account is through Hatch. Why would this not be FDIC insured? All deposits are immediately held at Hatch, it’s not possible any other way as that is the routing number used
That's my understanding...
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

JBTX wrote: Tue May 25, 2021 5:47 pm I figured it would change sooner or later. I wonder come Q4 if you could direct deposit the new amount each month the pull out an amount each month that is slightly less? A bit more hoops but still doable.

Or perhaps just start pulling the mortgage payment from it each month.
The "savings rate" still applies... So if you DD $2500/month, you should be able to withdraw up to 80% and still meet the 20% mark for the highest tier.
ball241
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Re: HM Bradley - is it safe - FDIC response

Post by ball241 »

Yea that’s accurate it’s hatch routing number, it’s clear.
JBTX
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

ball241 wrote: Tue May 25, 2021 8:44 pm If routing number is Hatch and account is through Hatch. Why would this not be FDIC insured? All deposits are immediately held at Hatch, it’s not possible any other way as that is the routing number used
Some seem to hypothesize that somehow HM Bradley may have access to your money as an intermediary and somehow steal it/lose it/etc. Then somebody writes to FDIC (without attaching what they wrote) and gets back what appears to be a generic response from someone who has no specific knowledge of the HM Bradley / Hatch setup, who articulates various potential outcomes using completely hypothetical scenarios.

Please note that our response to your deposit insurance coverage inquiry is based strictly on the information provided, and any change or omission in the facts or failure to comply with FDIC's deposit insurance requirements could change the deposit insurance coverage discussed in this response.
Then the conclusion is "OMG!! There is risk"

By all accounts the routing number is Hatch, the bank transactions indicate Hatch, HMBradley says they are Hatch accounts, the website account detail says "accounts provided by Hatch, FDIC insured", and customer service says they are Hatch accounts and FDIC insured.

Having said that can I say with 100% certainty that there isn't some secret backdoor or loophole where account holders get screwed? No I can't say that.
Escapevelocity
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Re: HM Bradley - is it safe - FDIC response

Post by Escapevelocity »

Selfishly, I’m happy that most people perceive risk to their cash with HM Bradley. If it was blatantly obvious there was no risk, they would be flooded with deposits and would surely lower their interest rates in short order.
dogagility
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Re: HM Bradley - is it safe - FDIC response

Post by dogagility »

index2max wrote: Mon May 17, 2021 12:04 pm This is why I recommend people take advantage of 3%+ accounts at credit unions offering nationwide signup. To sweeten the deals, have your spouse sign up for their own accounts too (you can be joint on those too). This way you're dealing directly with the financial institution.

Checking (with debit transactions):

1. Evansville CU

3.3% up to $20,000

2. Lake Michigan CU

3% up to $15,000

Savings (no debit transactions required)

3. Service CU

5% up to $500 in primary savings

3% up to $3000 in holiday club savings

4. Digital CU

6.17% up to $1000 in primary savings

5. Blue FCU

5% up to $1000 in accelerated savings
Open all these accounts to the max for maybe $700 more in my pocket over a years time span? Eh. I'll pass.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
ball241
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Re: HM Bradley - is it safe - FDIC response

Post by ball241 »

JBTX wrote: Tue May 25, 2021 9:26 pm
ball241 wrote: Tue May 25, 2021 8:44 pm If routing number is Hatch and account is through Hatch. Why would this not be FDIC insured? All deposits are immediately held at Hatch, it’s not possible any other way as that is the routing number used
Some seem to hypothesize that somehow HM Bradley may have access to your money as an intermediary and somehow steal it/lose it/etc. Then somebody writes to FDIC (without attaching what they wrote) and gets back what appears to be a generic response from someone who has no specific knowledge of the HM Bradley / Hatch setup, who articulates various potential outcomes using completely hypothetical scenarios.

Please note that our response to your deposit insurance coverage inquiry is based strictly on the information provided, and any change or omission in the facts or failure to comply with FDIC's deposit insurance requirements could change the deposit insurance coverage discussed in this response.
Then the conclusion is "OMG!! There is risk"

By all accounts the routing number is Hatch, the bank transactions indicate Hatch, HMBradley says they are Hatch accounts, the website account detail says "accounts provided by Hatch, FDIC insured", and customer service says they are Hatch accounts and FDIC insured.

Having said that can I say with 100% certainty that there isn't some secret backdoor or loophole where account holders get screwed? No I can't say that.
Good points. It seems like this is a nice account to have to save for different goals that are short term or park some cash. I don’t see much risk, maybe I’m missing something
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nisiprius
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Re: HM Bradley - is it safe - FDIC response

Post by nisiprius »

In the wake of the collapse of fintech pseudo-bank Beam Financial, Ken Tumin of DepositAccountsopined:
Ken Tumin wrote:My Take - Safety of banking at any non-bank fintech?

The problems at Beam highlight the risks of banking at a fintech that uses a sweep account arrangement.
I think that applies to Beam but not HM Bradley. But...
Ken Tumin wrote:It also suggests risks of banking at any fintech that’s not a bank. Even with fintechs that partner with just one bank, there may be more risk than we think. If the fintech doesn’t act responsibly, your money may be at risk.

As this Beam case showed, it was the FTC and not the FDIC that helped Beam customers. If you’re dealing directly with a bank that doesn’t act in a safe and sound manner, the FDIC can force changes or shut down the bank to prevent loss of your insured funds. If you’re banking at a fintech that doesn’t act in a safe and sound manner, you’ll need to wait for the FTC to settle with the fintech or win in court.
It seems pretty clear. HM Bradley cannot be as safe as a bank, because HM Bradley is an intermediary between you and the bank. Say you put an IRS refund check in a deposit envelope and ask a trusted friend to take it to the bank for you. It's almost certainly OK, but it is not the same as depositing it yourself. You can verify that it was deposited--but if it wasn't, it will be a major nuisance.

With a fintech that is not a bank, there is more to look at than the initials "FDIC." You do need to look behind the reassuring language it says on the website. You do need to deal with reputational issues. You do need to verify. And you (somehow) need to keep verifying because if anything goes wrong, by the time it becomes evident as a glitch or delay in withdrawal it may be late to avoid a major nuisance.

HM Bradley is not like Beam Financial, and postings in various forum threads have pointed out key differences. But the point I'm making is that none of the problems with Beam were obvious except in hindsight. The key detail in the Beam fiasco that their depositor's money was not safe even though they really were putting it into an FDIC-insured bank. It is a story about mishandling customers' money, not stealing it.

Nov. 4, 2020: Beam chief says there’s another side to story of deposit mishandling.
...according to [Beam Ceo] Du, [there] was a problem with the account Beam had opened at Huntington Bank. “When we first onboarded, they did not tell us that this account only goes one way, which means that basically the pool account can only go in deposit, it cannot withdraw,” Du said. “They're not able to do a net withdrawal from that pool account. If we knew it was going to be a one-way thing, we wouldn’t have worked with Huntington.” ... Du said this feature blocked Beam from withdrawing money from the Huntington account to return it to customers.
This is beyond grotesque. But the question is: how could a Beam depositor have known? They would have had to review the business contract Beam had with the Huntington Bank, and spot a seemingly obvious problem which Beam itself claims to have overlooked!

Another wrinkle is that the ability of a startup business to keep all the promises, answer the phones, and track all the money is dependent on it being a reasonably healthy business. So the business health of your fintech is something else that needs to be monitored.

It's probably not a crazy risk. It's probably not a big reward. Gotta strike the balance for yourself. But don't go thinking of HM Bradley as "a bank."
Last edited by nisiprius on Wed May 26, 2021 6:52 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
ball241
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Re: HM Bradley - is it safe - FDIC response

Post by ball241 »

nisiprius wrote: Wed May 26, 2021 6:32 am In the wake of the collapse of fintech pseudo-bank Beam Financial, Ken Tumin of DepositAccounts opines:opines:
Ken Tumin wrote:My Take - Safety of banking at any non-bank fintech?

The problems at Beam highlight the risks of banking at a fintech that uses a sweep account arrangement.
I think that applies to Beam but not HM Bradley. But...
Ken Tumin wrote:It also suggests risks of banking at any fintech that’s not a bank. Even with fintechs that partner with just one bank, there may be more risk than we think. If the fintech doesn’t act responsibly, your money may be at risk.

As this Beam case showed, it was the FTC and not the FDIC that helped Beam customers. If you’re dealing directly with a bank that doesn’t act in a safe and sound manner, the FDIC can force changes or shut down the bank to prevent loss of your insured funds. If you’re banking at a fintech that doesn’t act in a safe and sound manner, you’ll need to wait for the FTC to settle with the fintech or win in court.
It seems pretty clear. HM Bradley cannot be as safe as a bank, because HM Bradley is an intermediary between you and the bank. Say you put an IRS refund check in a deposit envelope and ask a trusted friend to take it to the bank for you. It's almost certainly OK, but it is not the same as depositing it yourself. You can verify that it was deposited--but if it wasn't, it will be a major nuisance.

With a fintech that is not a bank, there is more to look at than the initials "FDIC." You do need to look behind the reassuring language it says on the website. You do need to deal with reputational issues. You do need to verify. And you (somehow) need to keep verifying because if anything goes wrong, by the time it becomes evident as a glitch or delay in withdrawal it may be late to avoid a major nuisance.

HM Bradley is not like Beam Financial, and postings in various forum threads have pointed out key differences. But the point I'm making is that none of the problems with Beam were obvious except in hindsight. A key detail about the Beam story that they really were putting their clients' money into FDIC-insured banks. It is a story about mishandling customers' money, not stealing it.

Nov. 4, 2020: Beam chief says there’s another side to story of deposit mishandling.
...according to [Beam Ceo] Du, [there] was a problem with the account Beam had opened at Huntington Bank. “When we first onboarded, they did not tell us that this account only goes one way, which means that basically the pool account can only go in deposit, it cannot withdraw,” Du said. “They're not able to do a net withdrawal from that pool account. If we knew it was going to be a one-way thing, we wouldn’t have worked with Huntington.” ... Du said this feature blocked Beam from withdrawing money from the Huntington account to return it to customers.
This is beyond grotesque. But the question is: how could a Beam depositor have known? They would have had to review the business contract Beam had with the Huntington Bank, and spot a seemingly obvious problem which Beam itself claims to have overlooked!

Another wrinkle is that the ability of a startup business to keep all the promises, answer the phones, and track all the money is dependent on it being a reasonably healthy business. So the business health of your fintech is something else that needs to be monitored.

It's probably not a crazy risk. It's probably not a big reward. Gotta strike the balance for yourself. But don't go thinking of HM Bradley as "a bank."
All of this makes sense, but the account is opened through Hatch, you get a routing number that is clearly Hatch, which is FDIC insured. The money when deposited goes through this routing number to Hatch account in your name.
You should never be blocked as account is in your name and routing is through Hatch. It is not a pool account. If Hatch failed FDIC would step in. That’s my understanding, I could be wrong
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nisiprius
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Re: HM Bradley - is it safe - FDIC response

Post by nisiprius »

ball241 wrote: Wed May 26, 2021 6:52 am...All of this makes sense, but the account is opened through Hatch, you get a routing number that is clearly Hatch, which is FDIC insured. The money when deposited goes through this routing number to Hatch account in your name...
Yeah. The broad outlines are clear. As I said, "it's probably not a crazy risk and it's probably not a big reward." You can point to very clear differences between HM Bradley and Beam. It's still true that the Beam customers' money went into an FDIC-insured bank just as Beam said, and yet they had problems anyway.

So if you are looking at some other fintech pseudobank, it still isn't a bank, and it isn't automatically bad because Beam was bad, nor is it automatically OK because HM Bradley is OK. You can't say fintech pseudobanks are bad, you can't say they'r OK, all you can say is that they are not banks and the level of due diligence needed is higher than with an FDIC-insured bank account.
Last edited by nisiprius on Wed May 26, 2021 7:04 am, edited 1 time in total.
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ball241
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Re: HM Bradley - is it safe - FDIC response

Post by ball241 »

nisiprius wrote: Wed May 26, 2021 7:01 am
ball241 wrote: Wed May 26, 2021 6:52 am...All of this makes sense, but the account is opened through Hatch, you get a routing number that is clearly Hatch, which is FDIC insured. The money when deposited goes through this routing number to Hatch account in your name...
Yeah. The broad outlines are clear. As I said, "it's probably not a crazy risk and it's probably not a big reward." You can point to very clear differences between HM Bradley and Beam. It's still true that the Beam customers' money went into an FDIC-insured bank just as Beam said, and yet they had problems anyway.
Yes I just was not clear that they got a FDIC insured bank routing number on that account with an account in their name
That to me is the big difference.
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