4.85% 14-Month / 4.70% 7-Month CD at Principal Bank - Available Nationwide.

Update 2/29/08: The special CD rates have fallen. The new rates are 3.70% APY 7-month, 3.85% APY 14-month and 3.70% APY 33-month.

Principal Bank did something that you don't see much these days. They actually raised their CD rates. Their CD specials now include a 4.85% APY 14-month CD and a 4.70% APY 7-month CD. The 33-month CD remains the same at 3.95% APY. I was a little surprised by this, so I called and verified that these rates are correct. Apparently, they just raised them today. The CSR didn't know how long they would last. The 14-month CD previously had a yield of 4.11% APY, so as you can see, it's a big jump, especially in these days of plummeting rates. Thanks to the reader who mentioned these new rates in the comments.

The CDs have a minimum deposit of $5,000, and these are also available as an IRA certificate. My last review of Principal Bank and these CDs was in this November post. This info is based on what I received from a CSR in November. Below is a repeat of these details from that post.

These CDs are available nationwide. The one big downside with this bank's CDs is that the early withdrawal penalty is 12 months of interest for terms of over 12 months. This is much higher than the average penalty of 6 months interest. Another downside is that the bank does a hard credit pull when you open the account (which will slightly ding your credit score).

Update 2/22/08: Readers have reported being told that they do NOT accept ACH funding and also charge a fee for ACH outgoing funds.

On the positive side, you can fund the CD by an ACH transfer initiated during the online application. You still have to mail in a signature card which can be printed at the end of the application. You also have the option of mailing in the check with the signature card. I was told you have 14 days after submission for them to receive the signature card and funding to be guaranteed the rate at submission.

At maturity, you have to send in a form if you want to close the CD and withdraw the money. An ACH transfer is a free option. However, they charge $5 for mailing a check and $21.60 for a wire transfer.

Principal Bank is FDIC insured (Certificate # 34507). It has $1.6 billion in assets and $1.47 billion in deposits based on FDIC data as of 6/30/07. Bankrate.com gives the bank 3 out of 5 stars (performing) based on 9/30/07 data (down from 4 stars on 6/30/07 data).

Tags: CD rates, IRA rates