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Indymac Bank CDs - Big Rate Changes and Best Way to Close a CD

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Update 3/22/08: The 12 and 18-month CD rates were raised from 4.05% to 4.15% APY.

Indymac Bank made some big changes on its Internet CD rates. The yields on all of the terms under one year (even the 4-month Internet Special) are now under 3%. However, they did raise the yield on the 12 and 18 month CDs. Both now have a competitive yield of 4.05% APY.

For those who have CDs maturing at Indymac, be sure you don't let the CDs automatically renew. About 6 months ago, Indymac was offering 6-month CD yields of 5.70%. If you opened one of these last year and now let it automatically renew, you'll be stuck with their new low rate of only 2.75% APY.

As is typical with many banks, Indymac makes it easy to fund the CD, but difficult to withdraw the funds at maturity. I'm sure they hope people will just let the CDs roll over. Funding the CD can be done with an ACH transfer from an account at another bank. However, Indymac won't do an ACH transfer back into that account at maturity. You either have to request that a check be mailed or request a wire transfer ($30 fee for outgoing wire transfers), and you must mail or fax them written instructions for this. However, if you already have a liquid account at Indymac, you can instruct them by phone or online chat to close the CD and transfer funds to the liquid account. This seem to be the easiest way to close an Indymac CD. Readers have also mentioned that the liquid account can make it easy to fund a new Indymac CD. The liquid account may be something you want to keep since Indymac does have a history of good CD deals.

Unfortunately, opening a liquid account at Indymac on the internet is slow. So you'll want to do this several weeks before your CD matures. Once the liquid account is opened, you can use another one of your online accounts at another bank to withdraw the money from your Indymac liquid account. Banks like GMAC and ETRADE make it easy to link to other accounts and initiate ACH transfers without any costs.

Only people in California can open Indymac checking accounts. For those outside of California, your liquid account option is either one of the Money Market Accounts or the Savings Account. None of these accounts have competitive rates for balances under $25K, so you might be better off with one that requires the smallest balance to avoid monthly fees. That would be the Super Savings Account which requires only a $250 balance to avoid a $3 monthly fee.

Instead of just closing the CD, you may be able to negotiate a higher rate. It's not easy to do this by phone, but others have done it at Indymac. Here's a comment that a reader left in one of my previous Indymac CD posts:
I had two CD's mature this month @ Indymac and it was stressful to get to talk to someone who knew what they were doing, but I hung in there and found a knowledgeable person and they did not want to lose my funds so they agreed to match the best rate that I could find which was Countrywide @ 5.49% with an APY of 5.65%. I thought some of you might like to know that the advertised rate is not written in stone and they will match their competition.

If you're unable to negotiate a better rate and if you don't want to close the CD, at the very least request that they change the term to one with a competitive rate.

For more details on Indymac's certificates of deposit, please refer to this Indymac Bank CD review post.

As one of the largest mortgage lenders, Indymac is being hit hard by the mortgage problems. Latest news indicate that their first quarter financial results will be worse than their February forecasts. As I recommend with any bank, it's wise to stay under the FDIC limits. Please see my FDIC post for more info about what FDIC covers.

Indymac's rating at Bankrate.com has been dropping. It's now 1 out of 5 stars (lowest rated) based on 9/30/07 financial data (it was 2 stars on 6/30/07 data). The bank is a FDIC member (FDIC Certificate # 29730).

  Tags: CD rates

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Comments
16 Comments.
Comment #1 by Alex Moskalyuk (anonymous) posted on
Alex Moskalyuk
Timely post. Have a few of the CDs maturing within the next week, and opened their checking account just a week ago.

Be warned that opening that checking account might take up to 2 weeks, since they send you a "Welcome kit" with a deposit form, which you then must mail back with a check. Only after you fund the checking account with initial $100, it is considered "active".

Setting up outgoing ACH, on the other hand, is instantaneous, if they support bank verification via online login.

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Comment #2 by Ram (anonymous) posted on
Ram
Ive had a nightmare experience withdrawing from IndyMac - I didnt get their mailed check for 1 month, and after countless phone calls, and faxes - they said it got lost in mail.
And they didnt want to send a replacement check for 90 more days!! (their policy it seems). After fighting with them daily, i got my money after 2 more weeks!

Indymac just doesnt want to let go of the CD money... be very careful!!

Yes, I didnt ask them in WRITING to send me a check on maturing 2 weeks before maturity, and followed up till last day. And still I got so much runaround!

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Comment #3 by ram (anonymous) posted on
ram
Typo in the above comment:
Yes, I DID (not didn't) ask them in WRITING to send me a check on maturing...

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Comment #4 by Anonymous posted on
Anonymous
I just closed a cd with IndyMac. It took 3 weeks to get the check. I have 4 more maturing between now and august. I have already sent them a letter of direction and requested that they acknowledge receiptof same. No acknowledgement yet. I just got all of my cd's closed at wamu and was that ever a nitemare. I call wamu the roach motel for money and now it sounds like this is another money motel. I never did like cd's and after wamu and IndyMac I like them even less. I have decided that if I only have a few thousand and I can get within a half of percent with a MM or savings account I am better off staying away from cd's. That way I can move the money at will. I guess if you have large amounts of money its a different story. I am done with wamu and probally IndyMac. When someone gives you a hard time its dumb to go back for more. Banking Guy is there a govering body one can complain to about these internet banks.

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Comment #5 by Rick (anonymous) posted on
Rick
According to Indymac's CSR, you can also have them overnight a check for a maturing CD (including a tracking number) for $10 or have them 2nd-day a check (again with tracking number) for $5.

I've got a CD maturing 3/25 and am inclined to use one of these options over the $30 wire or potentially very lengthy wait for a mailed check.

Regarding the opening of a liquid account, I suspect a checking account is the way to go for larger CD balances. Be sure to check the daily/monthly withdrawal limits. I opened a Super Savings account to ACH out the funds in my maturing CD, but it turns out this won't work as the limits for that account are $5k a day and $25k a month, which is inadequate for a large CD balance.

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Comment #6 by Anonymous posted on
Anonymous
Interesting that only CA residents can open the checking account. As a Southern California resident I have the easiest way to get my money out -- I drive over to a branch,get a check and drive it to the next bank or CU to buy another CD. Like an earlier poster I'll give up a half of a percentage point, but for me this means getting CDs only at banks or CUs within driving distance -- always with the exception of PenFed of course.

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Comment #7 by Anonymous posted on
Anonymous
I had a CD mature recently and was told by a CSR that I could FAX wiring instructions. Not only did they not wire the money as instructed, the CSR then informed me that because it was over 100k, the request had to signed on an original letter. After overnighting the second request, it still took 4 more days to get the funds wire transferred and included a call to me to verify my letter request and I had to answer the security questions of course. :-)

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Comment #8 by Anonymous posted on
Anonymous
Call early in the morning 6-7am pst and you will get CSRs here in Pasadena. They are very helpful. Do not rely on written instructions. Upon maturity contact them with instructions. Try and negotiate a higher rate. Most banks do not like seeing money leaving.

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Comment #9 by Anonymous posted on
Anonymous
I did contact them on maturity date and they absolutely refused to do anything without written instructions. Lets be honest here, they will only let you take your money out if you demand it. I am fairly new at this online banking and cd's but I am starting to learn that getting an extra quarter or half of a percent is not necessarily a good deal in the end.

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Comment #10 by Anonymous posted on
Anonymous
My cd matured on 3/6 for $100k and I was prepared for this. I faxed instructions to close the cd - they won't do otherwise, as expected. They mailed the check after 2 days. I got the check within 7 days. I am going to use alliant, which has better rate for 13 months or even their savings.

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Comment #11 by Anonymous posted on
Anonymous
My above post(3/15 9:45 am): to be fair, indymac was ready to match the rate with countrywise etc, if it is national bank. I did not want to renew. Feds are expected to lower by 100 basis, further to problems with bearstearsn.

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Comment #12 by Anonymous posted on
Anonymous
sorry to hear about people's issues with indymac. but come on, aren't they a huge subprime lender?

i've heard of rate chasing, but you've got to be chasing the dragon to hand over your hard-earned money to an outfit like that.

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Comment #13 by John (anonymous) posted on
John
To be fair, I had a large CD with IMB mature recently, and they moved the maturing funds directly into what was then my IMB Money Market Account just with telephone instructions. Happened the next day, no fuss, no bother. Of course, that was one episode.

Since then, I swapped the First Rate MM Account, which had an interest rate that nose dived down, for a free checking account with no minimum balance (as a CA resident). Did it for exactly the reason mentioned herein: it's the best way to be able to move money in and out of IMB CDs if and when you need to.

I can ACH funds into their checking account in a day, and thereafter be available for funding a new CD if desired. To do that without an already existing account is a fair amount more cumbersome and time consuming.

However, the bottom line is: IMB was a rate leader in the past for CDs, in some duration categories. But lately, they're not keeping that position any more.

I'll also concur: their India-based CSRs, or wherever they are, are pretty weak. The folks I've dealt with via phone at the main Pasadena operation generally have been great.

--John in Los Angeles

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Comment #14 by Alex Moskalyuk (anonymous) posted on
Alex Moskalyuk
Anybody can speak to their CD Rollover/Renewal form?
https://www.myindymacbank.com/onlineserv/HB/SecureForms.cgi?primaryButton=ACCOUNT_SERVICES#
Looks like an official way to tell them what to do with a matured CD.

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Comment #15 by Anonymous posted on
Anonymous
iuopnI don't need all of that to tell them what to do with their cd's in the future. Alex, It is dumb to have to go thru all of that to close out a cd. I close cd's with other banks with a log in and a couple of clicks or a easy phone call. Let's tell it like it is, they are a fly by night bank that may or may not be around this time next year and they will do anything they can to hang on to every penny they can. I have 4 more cd's with them and when they mature and I get them closed I hope I am mature enough to stay away from banks like this in the future. My local bank that only has a few branches is now paying more on cd's than Indy is. They can color me gone.

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Comment #18 by Boby (anonymous) posted on
Boby
Hello. I find your blog very interesting. I think that everyone had something to do with banks. It is hard to choose a good and reliable one. After so many banks I had to deal with I should say that Indymac Bank is the best one. I learned about it from www.****edconsumer.com. Although the feedbacks about the company were not very positive I still ran a risk and went there.

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