These CDs can be opened online by people in any state. A signature card must be signed and mailed. I was told by the CSR that the rates may change every Tuesday. The next potential rate change would be next Tuesday 7/29/08. If you mail in a check and it's postmarked by then, you'll receive this rate according to the CSR. You can also fund the CD by transfering the money from a current Salem Five account. If you already have a Salem Five Direct checking account (see post), this may be the easiest way to fund it.
One downside to Salem Five's long-term CDs is a severe early withdrawal penalty. For a 60-month term, it's 15 months of interest. Please refer to their Account Disclosure for more certificate of deposit details.
This 5% yield is competitive, but it isn't the best. One advantage that Salem Five over some other banks offering 5% 5-year CDs is that it has private DIF insurance which combines with FDIC insurance to fully cover all deposits. Salem Five's overview of DIF explains DIF and provides some Q&A's. Here's an interesting one:
How financially strong are the FDIC and the DIF?
The FDIC is backed by the full faith and credit of the U.S. Treasury. While the DIF is not backed by federal, state, or local governments, the Fund is very strong and has extensive recourses. The banking crisis of the late 1980s serves as a poignant example of the DIF's financial strength. In this period, 18 DIF member banks failed. These banks contained funds from over 6,300 excess depositors. Their excess deposits totaled $250 million. Each and every depositor was paid in full.
Salem Five Bank also appears to be a strong bank based on the financial ratings: 5 stars (superior) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both are based on 3/31/08 data. Salem Five's financials can be reviewed at their FDIC page (FDIC Certifcate # 23296).