3.90% 60-Month CD at RBC Bank in AL, FL, GA, NC, SC & VA - Local Only
Update 8/01/09: The 60-month CD rate has fallen to 3.15% APY. Please check the bank's website for the latest rates.
RBC Bank is offering a special 3.90% APY CD 60-month CD. Minimum deposit is $5,000, and a checking account is required. The CD is also available in an IRA. There are Jumbo CD versions of these with a 3.90% rate with no compounding. The Jumbo minimum is $100,000. This rate is listed at the bank's rate sheet as of 7/09/09. According to the rate sheet, interest rates are valid through July 14, 209.
I called the bank for additional details. Their free checking account does qualify. It has no minimum balance or monthly fees. I was told if you open the Preferred Checking, they can bump the rate up to 4.00% APY. Monthly fees are waived if your combined balance (which can include the CD) is at least $10K. According to the CSR, they only do a ChexSystem for new deposit accounts with no hard credit inquiry. A hard pull is only done for credit products.
According to the CSR, the early withdrawal penalty is equal to 6 months of interest. With the potential of rising inflation causing higher deposit rates in the future, early withdrawal penalties are important issues to consider. If you open this CD at 4.00% and rates shoot up in 2 years so that you want to break this CD, the effective interest rate for those 2 years after the penalty comes out to about 3%. Having some long-term CDs with small early withdrawal penalties can be a better approach than just keeping all of your money in savings accounts and short-term CDs. That's one reason why many recommend CD ladders.
To open an account I was told that new customers must be within RBC Bank's market area which includes Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia. Refer to their banking center locator to find a branch near you.
Financial/FDIC Overview
RBC is a large regional bank with $29.8 billion in assets and 441 branches in the Southeast. It's part of the bank holding company Royal Bank of Canada which is the largest financial institution in Canada with operations in 53 countries. Like many banks it the Southeast, RBC Bank in the US has been having problems with bad real estate loans. There have been rumors that RBC may decide to exit the US market. However, RBC's international operations chief says that RBC plans to expand in the Southeast.
RBC Bank's ratings for safety and soundness are a little weak: 2 stars (problematic) at BauerFinancial and 2 stars (below peer group) at Bankrate.com. Both ratings are based on 3/31/09 financial data. RBC Bank is a member FDIC (FDIC Certificate # 33184).
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