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Barclays Online Savings Review

Barclays has enjoyed a long and storied history as a financial industry leader in the United Kingdom. While those of us in the United States often consider a financial company to be well established once it passes its centennial, Barclays was founded in 1690. As an organization, the bank is older than our country.

The brand made its entrance in the United States recently. During the collapse of the financial industry, Barclays acquired the remnants of the failed Lehman Brothers. The bank also primarily backed store-branded credit cards, like the Best Western Credit Card, until last year. The BarclayCard division of the company developed its own credit card products, such as the Barclaycard Ring MasterCard, which featured crowdsourced rewards. By using questionnaires and online voting, the cardholders can determine the card’s features.

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Click here to open a Barclays Deposit Account

Barclays, like many financial services companies, has been under scrutiny. Last year, the company was fined $450 million for its involvement in the Libor scandal, allegedly manipulating how intrabank lending rates were determined, either to make a profit or to appear more financially secure than the company might have been.

Increasing its presence in the United States, Barclays is now focusing on its retail banking division, offering online savings and certificates of deposit. I opened a Barclays Online Savings account to see if the bank would be competitive with some of the best online savings accounts, like Capital One 360 (formerly ING Direct) and Ally Bank.

Applying for the account

The Barclays Online Savings account application requires the same type of information all banks in the United States require. The application conveniently asks up front whether you would like to create the account as a Payable on Death account, where you can designate a beneficiary. This will come in handy as it the option might be difficult to change later or you might forget.

The bank requires a Social Security Number and a street address in the United States. You will need to choose one security question from among three standard choices. If you ever need to call the bank for customer service, the representative will challenge you, asking you to answer your chosen security question with the answer you provide on the application.

As with all online banks, creating a new account requires an electronic link with an existing checking or savings account. Barclays ask for your external bank’s routing number and your account number. Within a few days, Barclays will initiate a test deposit. New customers must verify the amount of the test deposit in order to successfully use the external bank for depositing and withdrawing money to and from the Barclay’s account. The application notes that the bank will hold new customers’ initial deposits up to five business days.

The next step in the application is to agree to Barclay’s terms and conditions. The terms make it clear that for the first thirty days, Barclays will hold all deposits will be held for five business days before making the funds available for withdrawal. After that, ACH transfers will be available immediately (but keep in mind ACH transfers are usually processed overnight) while all other deposits are subject to a hold for five days.

In the terms, Barclays makes it clear that it is under no obligation to reduce fees for insufficient funds:

If we receive a withdrawal, transfer, electronic transaction, or other item drawn on your Account, and there are insufficient funds in your Account to pay the item, we will return the item unpaid and you may be charged an Non-Sufficient Funds (NSF) fee. We will process withdrawals, transfers or related requests received on the same day in the order we choose. You understand that we have no obligation to minimize the NSF fees charged as a result of having insufficient funds in the Account, and that the processing order we select may result in your incurring more fees than you would if we were to process the withdrawals, transfers or related requests in a different order.

This has been a significant problem with banks; Bank of America and several other banks recently settled a lawsuit that alleged they ordered withdrawals in such a way that the bank could maximize insufficient funds fees. The bank expects that including this clause in the terms would prevent customers from being able to successfully take action against the bank for the same shady practice. The good news is that the NSF fee is only $5 per item.

I discovered that actually taking the time to read the terms and conditions creates an online delay long enough for the application to time out, requiring the applicant to start from the beginning.

The final step is to verify your identity using questions taken from information on your credit report. This is a common method of identity verification used by the financial industry at large. If everything is as the bank expects, you’ll immediately be granted an account number and Barclays will begin processing your initial deposit from your funding bank.

Using the Barclays Online Savings account

Logging in to your account for the first time, the website will ask you to create a SafeKeys phrase. The bank will display this phrase and a selected image each time you access your account online. Also, you will need to provide answers to five security questions. These are different from the security question and answer created during the application process. Normally, you would need to answer one of these five questions every time you access your account online, but you can register your computer (or other device) to skip this part of the log-in process. That’s not recommended for security reasons.

The website interface won’t win any awards for innovation, but it gets the job done. All the necessary features are present. You can view a list of recent transactions in your account, transfer funds to and from your linked accounts, and sign up for remote deposit. You can read your statements online; Barclays does not send any statements via the mail.

Once my account is fully funded, I intend to test the speed of withdrawals. All other things being relatively equal, this is what I frequently see as the most annoying aspect of online bank accounts. For savings, you expect the money to be accessible when you need it; if it takes an unexpected long time for your linked bank to receive a withdrawal from the online bank, the funds held there are useless for small emergencies. (This is a good reason to consider a tiered emergency fund.

Interest rates and fees

Initially, Barclays is offering one of the top interest rates among online banks. This is a normal tactic for a bank that’s currently in a stage where it wants to generate deposits and new customers. Some banks offer competitive rates for a short time, enticing new customers, only to later lower the rates to be more like brick and mortar banks, while others hold onto their position among their competitors. Barclays is currently advertising that its rate are ten times the national average, and it will be interesting to see if that continues to be an enforced marketing message.

Online banks tend to be a commodity. Prospective customers generally shop on price, not on customer experience. Brick and mortar banks usually attract customers through customer service and location, but without a face, online banks are generally similar enough that customers may not always care about the identity of the company behind the account. Since price is an important factor, interest rates and fees tend to be important points for comparison.

I’ve already mentioned that the Barclays Online Savings account has a low insufficient funds fee of $5. There are no minimum balance requirements, and no monthly account fees just for the benefit of owning an account. You may be charged a small fee if you make over six withdrawals during a calendar month, but this comes from a government regulation for all savings accounts. There are no other fees with Barclays to speak of.

If you choose to open an account, or if you have had previous experiences with Barclays, please share your thoughts here. Continuing a conversation about the bank will help other readers decide whether the Barclays Online Savings account could be a great choice for a primary high-yield savings account.

Click here to open a Barclays Deposit Account

Updated September 2, 2016 and originally published March 6, 2013.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 13 comments… read them below or add one }

avatar 1 qixx

As of right now the Interest Ratea show:
1.00% for Online Savings &
1.85% for 5 Year Online CDs

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avatar 2 Anonymous

It would be really helpful if these comments were dated. Can that feature be added?

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avatar 3 Anonymous

YES!!! Please date!!

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avatar 4 Anonymous

I have 55+ account in TD Bank. I don’t get charged for any kind of fee.

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avatar 5 Anonymous

Much easier and less convoluted than the CIT Bank registration process which pays the same interest rate. Had money parked earning the the DISCOVER savings rate of 0.8% and waited for them to bump me up to the higher Premier rate for larger balances but it never happened.

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avatar 6 Anonymous

Does Barclay’s do a hard credit pull when applying for a savings account?

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avatar 7 Anonymous

No they do not

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avatar 8 Anonymous

Any update on the funds transfer process and how long it takes? I am shopping around for a new online savings account after the rate on my HSBC online account dropped to a ridiculous 0.05%. (What a joke!). The funds transfer process with HSBC takes 3 business days which was annoying enough. I read somewhere that Barclays can take up to 5 business days. Is that true? If that’s so, it’s almost not worth it. Thanks!

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avatar 9 Anonymous

Anyone can provide insight on the following please?
Does Barclays US ever mail documents containing your full SSN?
Does Barclays US have an electronic version of the 1099-int ? If they have to mail, does it contain your full SSN?

I almost went with Ally until I discovered that they do both of the above, which is not very secure.

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avatar 10 Anonymous

Barclays US never sends you anything in the mail except to confirm you have successfully opened an account, it does NOT contain a soc.

Yes it only does electronic 1099.

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avatar 11 Anonymous

Barclays US Savings will never mail your full SSN. There IS an electronic version of the 1099 but it will also be automagically sent out during January – it will not contain SSN, if anything only the last 4.

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avatar 12 Anonymous

March 12, 2014 – I have the dream account – which max deposit a month is $1k. Biggest problem, when I set-up to link to my other banks (add external account from the Chase website or BOA) the test deposits counted toward my $1K – so when I tried to transfer $1K – it would get rejected. My payroll department had so many problems with deposits getting rejected (because of these trial deposits) they deleted it & just added the money to another account. When you call customer service – they don’t know anything. They are looking at the same screen you are looking at. I called because I got an email about a rejected deposit and the person had no idea what I was talking about…put me on hold to research…even though I received an email. Now I’m having a problem with an ACH transfer out of my account – the supposed receiving bank has no idea what I’m talking about. The person who I spoke with in Customer Service did some research…then she came back to explain. I pointed out the holes in her response – she put me on hold again to ask how to better phrase it?? Are you kidding me??? All the Customer Service people have to “research” no one can ever give you an answer.

It’s all very automated and that’s why their customer service stinks! Oh and they are not 24/7 – 8-8 EST.

Yes, they have high interest rates but I’ve been shopping around – too much competition for such bad service!

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avatar 13 Anonymous

I have a Barclays online savings account and have been happy with the service and the 1% is much better than the .01% I would get at Chase where I have my online checking. As described above the process takes about 5 days and having had Ally, ING, etc. in the past, Barclays service seems no better or worse from my 2 years with them. 9/14/15

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