Thriving Millionaires

By Eric

About six months ago, a friend told me that Goldman Sachs was trying to compete in the retail/consumer banking market more competitively and, to gain new customers, was offering very lucrative interest rates on their online savings accounts and CDs. As someone who loves receiving nice interest payments (especially when compared to a more traditional bank’s current interest rates), I clicked over to their website and opened an online savings account to check it out. Shortly thereafter, I opened two CDs with them as well in order to reap a higher rate of return on my money.

Below I’ll catalog my experiences with Marcus by Goldman Sachs and try to stay objective. But it’s worth pointing out (I always try to call out my own biases), that I am actively working to close my accounts with this bank for reasons that will become clear as you read.

Savings Account Interest Rates:

Ah, the siren’s song of higher interest rates!

We use a traditional bank for most of our banking needs, so seeing Marcus offer 2.1% interest compared to our 0.1% was incredibly compelling. Immediately, I reached for a calculator and figured that the 2.0% difference was worth an extra $200 per year on every $10,000 we moved from our current bank to Marcus. $200 may not seem like much, but that’s $200 per year we would be giving away by not moving the money.

When you play that difference out over 25 years, assuming no change in interest rates, that $10,000 sum would be worth $10,300 at the traditional bank vs $16,500 at Marcus. The $200 per year could be easy to ignore, but the power of compounding interest illustrates the value of the 2% difference. $6,000 in “free” money is hard to pass on.

This was the math that led me to take action and actually open the account. The cost to open an account and move money was too low to not take action.

The actual opening of the account was easier than I expected. The online flow was simple to navigate, and I was able to open the account within minutes. I added my wife to the application and the website gave me an error message about her – but said I could call the 800 number to get her added to the account at a later date, so I didn’t worry much about it.

I was able to link our traditional bank account via the routing number and account number, and had the account funded within minutes. We were on our way to unleashing the power of compounded interest!

CD Interest Rates:

After opening the savings account, I spent some time clicking around the Marcus website and found the page outlining their CDs. As you would expect, the CD rates were higher than their standard online savings account rates – but because I was already in the interest-rate-shopping mindset, I decided to open a 12-month CD paying 2.4% interest.

Because the time period was short (12 months) and the interest rate was different enough that it was worth locking the money up, I again filled out the online application for myself and my wife. I don’t think I would have opened the CD for 0.1% or 0.2% difference but given that this whole Marcus thing was an experiment, I figured 0.3% difference was worth the liquidity sacrifice. For the sake of the experiment, I moved only a little bit of money to this CD (I believe the minimum was $500) and decided to see how things went.

As I worked through the application, I received a similar error message about my wife being unable to be added to the account. Assuming it was something clerical, I continued with the opening knowing that Marcus allowed me to add someone to the CD within 3 days of opening the account.

Website Navigation:

Overall, the Marcus website is functional. It’s very simple and easy to navigate but definitely doesn’t have any of the bells and whistles that a traditional bank has. If you’re looking to open an account, park some money there, and reap a higher rate of return – the website will accomplish that task.

The main drawback to Marcus’ online portal is that there is no app for the bank. Because 90% of my online banking is done from my cell phone, the lack of an app makes using Marcus pretty cumbersome. Ideally, they would build an app in the future and enable time-saving features such as TouchID to make logging in and making quick financial transactions easier – but until they invest in the development of an app, the website will have to work.

Joint Account Issues:

Here is where Marcus fell flat. And not a little bit. Our experience with adding my wife to the account is the single reason we’re closing all of our Marcus accounts.

Marcus refused (and still refuses) to add my wife to this account.

As I alluded to earlier, when setting up the savings account and CD, I received an error message that they weren’t able to add my wife to the accounts but was told that I could call the 800 number and receive assistance with adding her. However, when I called, they were unable to add her – and could not provide a single reason as to why.

My wife and I hold all of our funds in joint accounts, which is important to us on principle. When a bank is unable to add my spouse, I don’t like that bank because they are asking us to break our principles. We spent a combined 3 hours on the phone with their customer service attempting to get her on the accounts, and all the customer service reps could do is help us fill out the same application that had resulted in an error message online.

When I pushed the representatives and their managers to provide a reason, they couldn’t do so. That is the part that is absolutely baffling to me. If it was a question of assets, we have both of our names on all accounts, so if Marcus approved me, they should approve her. If it was a question of credit scores (which makes no sense because it was a savings account – not a line of credit), the same logic applies – we have nearly identical credit scores, so if they approved me, they should approve her.

Their customer service representatives were dismissive and rude. When I expressed my frustration, one of their reps told me that some of their clients are moving millions of dollars under their management (implying that because we didn’t have millions, she didn’t care). They talked in circles, ignoring my questions about why they would have approved me (with an identical personal balance sheet) but wouldn’t approve my wife.

After much frustration, we’ve decided that Marcus is not a bank we want to do any business with.

Regardless of the dividend rate, no bank is worth breaking your personal principles for. Especially not one that treats their customers with indifference.

It’s also worth noting, that while their interest rates are good – similar rates can be found at other online banks such as Ally.

Closing the Accounts:

Because I was foolish enough to open some CDs with Marcus, we’ll be leaving that money until the maturity date. But as soon as those CDs mature, we will immediately withdraw the funds and transfer them to another bank.

I haven’t yet closed the savings account just in case I need to transfer the CD money to a Marcus account before transferring externally – but we did withdraw functionally all the funding as to limit our assets associated with Marcus. I think we have about $70 left in that account.

I debated closing the CDs early and paying the early closure penalty, but because the term was so short and we’re getting closer to the maturity date each day, we’ve decided to leave them be.

Summary:

Marcus by Goldman Sachs should be ashamed of itself.

Denying applicants the ability to add their spouses is absurd. Especially on something like a savings account. I could potentially understand their logic if it was a line of credit, but accounts where we are providing the funds up front is a no-brainer.

What’s worse is their inability to provide an answer to why they refused to add her. Any bank looking to grow its business should provide rationale for their decisions when those decisions are impacting their target customers.

Their customer service representatives provided no help and a lot of frustration. The dismissive attitude and inability to provide any level of service makes me feel they should just stop listing the 800 number on the website.

Their lack of an app is also an annoyance. This one wouldn’t have been insurmountable if all else had gone well, but it is a great illustration of how Goldman Sachs is half-heartedly pursuing gaining new retail bank clients.

As appealing as the interest rate was, no bank is worth the trouble that Marcus has given us. Especially not for 0.1% difference over banks like Ally. We’ve moved the money we had held at Marcus to an Ally account, and we’ve been incredibly pleased so far – they even “allowed” my wife to be on the account with me!

Patrick’s Thoughts:

Eric’s experience is like a lot of experiences other people have. Companies lure you in with an enticing offer for a sexy new service and that service performs well below expectations. What I really liked about Eric’s story is that he could have easily kept his funds in the accounts and still received the benefits, but he didn’t sacrifice his principles. While making money is important, it’s not more important than your principles.

For example, let’s say you were offered a great opportunity to invest in a business that you knew was going to defraud investors. Would you do it? Chances are, if you’re like most good people, you probably wouldn’t. There is no sense in making an investment in a business if you know it is going to do something that compromises your moral values. In Eric’s situation, his life is built around the fact that he and Melissa have joint access and control to their financial assets. If a company gets in the way of that, and it’s something that’s important to you, run at all costs.

Another important point from Eric’s story happened during the sign-up process. Some companies love to tell you that you can address an issue, or they will be happy to take care of something down the road, just to get your business. Often, especially on items that seem so minor, we give them the benefit of the doubt and trust them.

When Eric initially tried to sign Melissa up, he received an error message. As his example showcases, we should not be so quick to trust companies selling us a good deal, especially ones that are new services or organizations. While I believe the internet has made things more transparent for consumers, there are still always going to be people out there who will say whatever they can to get your business.

The moral of the story is, sometimes we make decisions with the best intentions and are let down. The important thing is to not let your prior decision impact what you’re going to do moving forward. As Eric’s story shows, if you realize you’ve been put in a less than ideal situation, try to change it. Sure, you may not be able to fix it entirely, but if you stick true to your guns and do what’s right, you’ll be in a much better position than if you do nothing.