Dedicated to Deposits: Deals, Data, and Discussion

5.00% 23-Month CD with New Key Advantage Checking at KeyDirect


Update 10/13/08: The yield on the 23-month CD has gone down. Please refer to this post for a new special CD.

KeyDirect is still offering a 4.75% APY 23-month CD. They've just came out with a new checking account, Key Advantage Checking, and one of the perks of this account is an extra 25 basis points on the rates of any of its CDs. So with this rate bump, you can get some very competitive rates: 5.00% APY 23-month, 5.50% APY 48-month and a 5.75% APY 10-year.

The minimum deposit for the CD is $5,000, but to avoid a $15 monthly fee on the Key Advantage Checking, a combined balance of $10,000 is required. The combined balance includes checking, savings and CD balances. A few other ways to avoid a monthly fee is described in the disclosure.

Refer to this checking comparison page to see a list of the features. If it were not for the CD rate bump, the Free Checking Account would be a better choice for most people. Both checking accounts have decent interest rates, but if you need to a lot of liquid money, you should consider Key's Money Market Account (see post) or other higher yield savings accounts.

Opening And Closing the CD

The 25 basis-point rate bump doesn't seem to be listed on the website. A reader commented on this, and I called for details. If you don't already have the Key Advantage Checking, the CSR recommended that you open the CD by phone rather than online. By applying by phone, the CSR can ensure that the CD application notes that you are also applying for the checking account and will ensure you receive the rate bump. Past commenters have also recommended applying by phone since their online application doesn't eliminate the need to fill out paperwork.

The CSR said it'll take 7 to 10 business days for you to receive the welcome package. You'll then have to mail back some forms along with your check. They do have the "postmark" rule for deposits in that you'll receive the CD rate in effect at the time of the postmark of your check. However, if rates go up, I was told they'll give you the higher rate.

You can also fund a CD with a wire transfer. However, a reader was told last year that if you're funding a trustee-to-trustee transfer of an IRA, their New York IRA center will not accept an incoming wire transfer.

When the CD matures, I was told you can call to instruct them to close the CD. If you have the checking or money market account, you can instruct them to transfer the CD funds into one of these accounts. You can also have them mail you a check or perform a wire transfer ($25 fee for outbound wire transfers).

CD Disclosure

The CD disclosure is avaialable at the bottom of their Certificate of Deposit page. According to this disclosure, the 23-month CD has an early withdrawal penalty of 6 months of interest. The penalty jumps up to 9 months of interest for terms of 24 to 47 months and 12 months of interest for terms of 48 months or more.

Eligibility for KeyDirect

Accounts at KeyDirect may be opened by people who live in 37 states and in DC which don't have KeyBank branches (see bottom of their CD overview page). In the other states, you have to open CDs through Key Bank (which may have lower rates).

KeyDirect Overview

KeyBank is based in Cleveland, Ohio and has been FDIC insured since 1956 (FDIC Certificate # 17534).

Key Corp, the parent of Key Bank, has been hurt by the real estate slump. It reported a large second quarter loss. This news article has the details. This latest news is probably not reflected in Key Bank's financial ratings which are primarily based on 3/31/08 data. gives the bank a 4-star rating (sound) and BauerFinancial gives it a 3.5-star rating (good).

Thanks to the reader who mentioned this new checking account in the finding the best deals post.

  Tags: KeyDirect, CD rates, IRA rates, checking account

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Comment #1 by Anonymous posted on
This is great, competition for deposits is going nuts!

5% APY for 23 months is excellent if you have $10K to avoid the monthly fee on Key Advantage Checking.

Seems a better deal comes along every week. I got 5.37% APY for 3 years last month at my credit union. My only concern is that it looks like there will soon be even better deals.

Comment #2 by Bozo (anonymous) posted on
To: Anonymous
Re: Competition

It was a stretch only a few months ago to find +5% deals. Now, it's commonplace (again, might I add). Of course, before we all get too giddy, it is noteworthy that inflation is bringing the "real" rate of return on these rates close to 1%, and if they are in taxable accounts, well, enough said.

The point is that you need to be diversified. Sometimes, prudent capital preservation (even if it involves a real negative rate of return after taxes and inflation) is important as an "anchor" to riskier (and potentially more lucrative) investments.

Stated another way, just because 5% on a CD gets eaten away by taxes and inflation doesn't mean it's a bad investment. This year, for example, it's WAAAY better than that "balanced" 401K you might have, or your Florida condo (ugh, glad I don't have one; but I do have one in Maui . . . not planning to sell it, by the way).

Diversify, diversify, diversify.



Comment #3 by scott (anonymous) posted on
Just opened a 23 month CD at Key, $50k+ tier was even a little better at 4.77%. But best of all was reading here about about the 1/4% bump so now at 5.02%. Great work as usual in filling us in on these things, will be sending a little tip for your help

Comment #4 by Ashish (anonymous) posted on
I found that today there are two rates advertised for the CDs of term 13 months. Look at the links attached where one is through the one in which I went through the account whereas the other one is the one in which I went without signing in. Both rates are different. who knows what the hell is going on.

Comment #5 by Anonymous posted on
I had a poor experience with my Key Direct CD. It took me 5 tries to get the POD's listed on my CD, and all during the 2 month wait, I had significant funds that were not FDIC insured. In this time of bank failures left and right, this poor customer service was unacceptable. I am still looking into other complaint options at this point.

Comment #6 by Dan The Man (anonymous) posted on
Dan The Man
I had a good experience. Opened a 10 yr. CD and the Key Advantage Checking. I did the application on the phone on Fri. I funded the Checking acct.during the Phone application with a credit card.($50 minumum). That way I had an account opened. I didnt wait for the welcome package, I sent a check to fund the CD Sat. They recieve it Monday and the funds were withdrawn Tues. from my bank. The CD was opened and earning interest on Tues. I got my Welcome Package Thur. I had to sign 2 forms and mail them back.
They are sending me a form for the beneficiary election. On Thur. I called them and they helped me with the Online Banking setup. It was easy. Reviewed my account online and everything was opened and funded

Comment #7 by Anonymous posted on
A CSR informed me that if a checking account is opened concurrently with a CD, the 25 extra basis points will be added to not only the CD presently being opened, but also to future ones opened so long as the checking account remains open with at least $50 in it. The 23-month deal is a good one in light of present economic conditions.

Comment #8 by Mitch (anonymous) posted on
The 23-month deal ended today. They offer a 29-month CD with an APR of 4.898% and the extra .25% if you have or open a checking account. Seems to be a pretty decent deal in today's environment given the recent Fed rate cut.