New UmbrellaBank Rates: 5% 3-Month CD / 4.75% Money Market

May 11, 2006 - 8:28 AM by Ken Tumin

UmbrellaBank is the first to respond to the Fed funds rate hike although I was hoping for more of an increase to their money market rates. Their money market account rate is now 4.75% APY (up from 4.70% APY). Their short term CD rates have increased by 0.15%. Their 3-month, 6-month and 12-month CDs are now at 5%, 5.20% and 5.35% APY. Below is the full list of new and old yields:


Term    Old APY   New APY    Increase
3 Month   4.85%     5.00%    +0.15%
6 Month   5.05%     5.20%    +0.15%
1 Year    5.25%     5.35%    +0.10%
1.5 Year  5.28%     5.35%    +0.07%
2 Year    5.30%     5.35%    +0.05%
2.5 Year  5.20%     5.30%    +0.10%
3 Year    5.20%     5.25%    +0.05%
4 Year    5.20%     5.25%    +0.05%
5 Year    5.20%     5.25%    +0.05%

UmbrellaBank's last rate change was four weeks ago.

Friday is GMAC Bank's usual time for rate updates. It'll be interesting to see how GMAC will respond to yesterday's funds rate hike. I would have thought we would see a larger rate hike in Umbrella's money market account. The banks are raising rates, but they don't seem to be in a rush to reach 5%.

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Anonymous - #1, Friday, May 12, 2006 - 11:37 AM

Having invested in a CD several months ago with Umbrella Bank, they have an unusual strategy for "compounding" interest for shorter term CDs. According to the Truth-in-Savings Disclosure, "If your account has an original term of less than one year, interest will not be compounded and will be credited to your account at maturity. If your account has an original term of one year or more, interest will be compounded daily and will be credited to your account every quarter."

Originally I was going to invest in a 6 month CD, but after reading the disclosure and discussing this issue with Umbrella Bank, I opted for a one year CD to achieve the published Annual Percentage rate (APY). Based on the disclosure, the interest on any CD less than one year is simple interest and the APY will be the same as the interest rate. As in all cases, your mileage may vary.

Banking Guy (anonymous) - #2, Friday, May 12, 2006 - 6:04 PM

Thanks for providing the details about Umbrella's CD compounding.

I noticed UmbrellaBank doesn't make the APR easily available. Their table only lists APY. I noticed on Bankrate that their 6-month CD has a rate of 5.13% and an APY of 5.20%. This looks right based on what you described. If you roll all of your 6-mo CD into another 6-mo CD paying the same 5.13% rate, that would result in an one-year yield of 5.20%. (1 + 0.0513/2)^2 = 1.051958

For those who would like more explanation on the difference between APY and APR, please refer to this post.

Anonymous - #3, Saturday, May 13, 2006 - 6:47 AM

Just looked for the rating of Umbrella Bank on Bankrate.com. Could not find it. Is there a problem with the bank?

Banking Guy (anonymous) - #4, Saturday, May 13, 2006 - 1:05 PM

UmbrellaBank is listed under its parent New South Federal Savings Bank. Here's their description at Bankrate.com. In the last year, they've always had either a 1 or 2 stars (out of 5) rating. Currently they're at 1 star (weak)

Anonymous - #5, Friday, April 27, 2007 - 11:37 AM

Umbrella Bank is the most unprofessional bank I have ever dealt with. My personal information was incorrect, and when I called in to make the correct I was informed that my request would be sent to a different area, for completion. I later got a call from the Call center Rep telling me that my informatiom had been miskeyed and again she wanted me to verfy the same information. I don't know if I would entrust money to a company that can not follow directions.

New UmbrellaBank Rates: 5% 3-Month CD / 4.75% Money Market

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