Dedicated to Deposits: Deals, Data, and Discussion

5.55% 12-Month CD at VirtualBank - My Experiences with a VirtualBank CD


Virtual Bank
Update 8/7/07: The 12-mo 5.55% CD has ended. It's now 5.13% APY.

VirtualBank just increased the rate on its 12-month CD from 5.39% to 5.55% APY. The 5.55% APY is now the best yield for a one-year CD that's available nationally. The 6-month CD rate also increased by 5 basis points to 5.44% APY.

VirtualBank CDs have the following features:
  • $10,000 minimum to open
  • Compounded daily and credited monthly
  • Joint and Trust accounts can be selected
  • A beneficiary can be included
  • Can be reinvested or deposited into a VirtualBank eMoney Market Account
  • Early withdrawal penalty equals: 1 month interest for 3 month term, 3 months interest for 6 and 9 month term, and 6 months interest for one year or longer terms. Penalties applied whether interest has been earned or not.

Last year I opened a VirtualBank CD. I already had their eMoney Market account. So I first transfered the money into this account and used this to fund the CD. You can also fund the CD by check or wire transfer. I was able to open the CD online, but there were a few complications. Hopefully they've improved things in the last year. The first complication is that it required not only my eMoney Market account number, but also my Client ID. This is easier to find now. Click on the "My Accounts" tab for your eMoney Market account. The Client ID is now listed on the left middle of the page. The second complication was that they require you to mail back to them a signature card. This can be done by printing out the card at the end of the application or by waiting for them to send you the signature card with the other CD documentation along with a postage-paid envelope. The CD took effect the next day after I applied online, so there's no rush in sending the signature card.

To manage the CDs, you can use VirtualBank's secure message email system that's available when you are logged in. Before the CD was about to mature, I sent them instructions to close the CD and transfer the money into my eMoney Market Account. This was done with no problems. I received the reply from them on the next day. Note, it's always a good idea to follow up with any bank during the grace period, to make sure the CD is closed as instructed. I believe the grace period at VirtualBank is 14 calendar days.

Once the money is transfered to the eMoney Market Account, it's easy to initiate transfers to your external linked accounts. The eMoney Market Account only has a yield of 4.60% APY for balances under $50K (4.86% APY $50K to $100K and 5.13% APY for over $100K). Even though the yield isn't the best, it does have several nice features, and as I've mentioned, it makes purchasing and closing CDs very convenient. For more info on the money market account, please see this post.

Another thing I like about VirtualBank is the login security. In addition to the password, you have to key in a PIN into a virtual keyboard. Some may think this extra step is a hassle. I haven't had any trouble with it, and it should make it harder on spyware from being used by criminals to access your account.

VirtualBank is a division of Lydian Private Bank which is FDIC insured (FDIC Certificate # 35356).The bank currently has a 3 out of 5 star rating (performing) at based on data from March 31, 2007.

  Tags: Virtual Bank, CD rates

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Comment #1 by Anonymous posted on
I have a 3-year-old child. If I put him as beneficiary, does that qualify me to go to 2x$100K insurance on the money, or is it just only for majors?

Comment #2 by Banking Guy (anonymous) posted on
Banking Guy
To qualify for the extra FDIC insurance, I don't believe the beneficiary has to be an adult. The beneficiary does have to be a qualifying beneficiary which includes your children. The only thing I'm not 100% sure about is if the CD account would be titled at VirtualBank as a payable-on-death (POD) account or similar account. This is also a necessary condition to qualify for the higher insurance amount.

Please refer to my FDIC resource post for more info.

Comment #3 by scott (anonymous) posted on
Listing a minor is fine, But you get no extra coverage on the first beneficiary. To get $200K you would need to list two beneficiaries. Virtual does not do "In Trust For" accounts and they only one POD to be listed. Not many banks allow you to list more than one, About the only bank that I have seen that allows it is Countrywide. You can list a few right on the Application

Comment #4 by MK (anonymous) posted on
Daily, weekly or monthly compounding will all result in the same ROI on a 12 month CD.

The yield quoted is 5.55% and so $10,000 will beocome $10,555 at the end of 12 month period - regardless of the frequency of compounding.

Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Scott, Thanks for pointing out that you need at least 2 beneficiaries to get above the $100K coverage.

You could do two CDs with two different PODs (making sure each POD is a qualifying beneficiary).

Comment #6 by Anonymous posted on
Banking Guy...are you sure a second beneficiary is necessary for extra FDIC coverage on a second 100K account? In reading the FDIC site, I was always of the clear impression that I could get 200K of FDIC coverage if in a single bank I had, for example, a 100K CD in my own name alone, and a second 100K CD in my name with a POD beneficiary. Nothing on the FDIC site seems to require two beneficiaries on a CD account.

Comment #7 by scott (anonymous) posted on
I was talking about needing 2 POD's if you only had one account. Your 2 account scenario, with one single and one with a POD would get you $200k

Comment #8 by scott (anonymous) posted on
Big drop, Now 5.13%

Comment #9 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the info. Sorry to see this high rate CD end.

Comment #10 by Anonymous posted on
Lydian's rating has downgraded to 2 stars at Bankrate.