EmigrantDirect's 5% CD Terms Now 9-Months and Up
Apr 15, 2006 - 10:50 AM by Ken Tumin
EmigrantDirect's My Way CDs now have terms as short as 9 months. When these CDs first came out last month, the shortest term was 18 months. You can now choose any term from 9 months to 10 years in one month increments. The APY on all terms remains at 5% with a minimum deposit of $1,000. The early withdrawal penalty for terms of less than one year is 90 days of interest. Terms of one year and more have a penalty of 180 days of interest.
This change makes these CDs much more competitive. There's a big difference between a 5% APY 18-month CD and a 5% APY 9-month CD. The best 9-month CD currently available nationally is 5.10% APY at AmTrustDirect. So 5% is near the top.
I was hoping EmigrantDirect would just raise their savings account yield to 5%. With many non-promotional money market account yields around 4.70% and with the Fed likely to raise interest rates next month, 5% doesn't seem too high. Now with CDs, EmigrantDirect may see less reason to offer super high savings yields like it did in early 2005 and in September 2005.
The "My Way" certificate of deposit requires that you have an EmigrantDirect savings account. With a high-yield no-minimum savings account, I don't consider this a problem. In fact, I like this model. You fund the CD immediately with money from the savings account. When the CD matures, you have the option to close it and transfer the money back into your savings account. Once in the savings account, you can easily move it through ACH transfers. I don't see any documentation about tranfering money from a closed CD back into the savings account. I would assume EmigrantDirect has this feature.
ING Direct has the best online CD system that I've seen in terms of ease of use (not the best in terms of rates though). Once you open an ING Direct CD, the CD is shown in your account summary page. EmigrantDirect is still working on their system. In their CD disclosure they mention that they are enhancing their website so that the CD accounts will appear in your account summary and your statements will be displayed online.
This change makes these CDs much more competitive. There's a big difference between a 5% APY 18-month CD and a 5% APY 9-month CD. The best 9-month CD currently available nationally is 5.10% APY at AmTrustDirect. So 5% is near the top.
I was hoping EmigrantDirect would just raise their savings account yield to 5%. With many non-promotional money market account yields around 4.70% and with the Fed likely to raise interest rates next month, 5% doesn't seem too high. Now with CDs, EmigrantDirect may see less reason to offer super high savings yields like it did in early 2005 and in September 2005.
The "My Way" certificate of deposit requires that you have an EmigrantDirect savings account. With a high-yield no-minimum savings account, I don't consider this a problem. In fact, I like this model. You fund the CD immediately with money from the savings account. When the CD matures, you have the option to close it and transfer the money back into your savings account. Once in the savings account, you can easily move it through ACH transfers. I don't see any documentation about tranfering money from a closed CD back into the savings account. I would assume EmigrantDirect has this feature.
ING Direct has the best online CD system that I've seen in terms of ease of use (not the best in terms of rates though). Once you open an ING Direct CD, the CD is shown in your account summary page. EmigrantDirect is still working on their system. In their CD disclosure they mention that they are enhancing their website so that the CD accounts will appear in your account summary and your statements will be displayed online.
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Anonymous - #1, Saturday, April 15, 2006 - 12:53 PM
ING has 5% APY for CD with term ranging from 12 months to 60 months now.
Nick (anonymous) - #2, Saturday, April 15, 2006 - 12:58 PM
I'm gonna wait for the next round of rate increases and then maybe give ED's CDs a shot. I bet there'd be a lot of angry people if ED increased its savings rate beyond 5% before their 9-month ED CD matured. That would be hilarious!
Banking Guy (anonymous) - #3, Saturday, April 15, 2006 - 2:02 PM
Thanks for the update on ING! Guess they're preparing to stop the outflow of funds with the end of the Save Up Sale.
Nick, I think that's a good choice. I wouldn't be surprised to see ED increasing their savings to at least 4.75% in May. Perhaps their CDs will then go up to 5.25%.
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