Update 9/13/08: The 12 and 13-month CD yields have fallen to 4.00% APY.
Update 9/06/08: The 12 and 13-month CD yields are back up to 5.00% APY.
Update 8/30/08: The 12 and 13-month CD yields have fallen to 4.50% APY.
I opened the 5% APY 12-month Online CD at WaMu.com this afternoon. The process went smoothly. I wasn't able to open it in the morning due to some type of website upgrade that was taking place. As I mentioned in my first post on this 5% CD, it's also available as a 13-month term. In addition to Online CDs, it can be opened by phone or at a WaMu branch. I've been told by a WaMu CSR that this special is scheduled to end on 8/29/08. I wouldn't be surprised if they extend it. There's also a 13-month 5% CD and an 8-month 4.25% APY CD. These rates are listed at WaMu's Online CD page.
A summary of the important features that I can confirm from the online application and from the account disclosure (pdf) include:
- $1,000 minimum deposit
- CD can be funded with an ACH transfer from an external checking or savings account. Two small deposit amounts are used to verify the account. Also, the deposits are followed by a withdrawal of the sum of the two deposits.
- The application did not provide fields for POD beneficiary info
- Early withdrawal penalty for a 12-month term is 180 days of interest on the amount withdrawn.
- You have 7 days to fund the CD to lock in the rate.
- Grace period at maturity is 7 calendar days
- If you withdraw funds during the grace period, no interest is earned between the maturity date and the time of the withdrawal
I don't have experience closing a WaMu Online CD, but a reader described a nice online feature at WaMu that can make closing a CD easy if you have a WaMu checking or savings account:
when a CD matures, on the account summary you will see a big bold text saying: "This CD has reached its Maturity Date!" under the matured. They give you a bunch of information and even let you close and transfer to your checking/savings.
They don't seem to allow an ACH transfer to your bank account outside of WaMu.
Update 8/25/08: The reader who mentioned this withdrawal feature commented that his last matured Online CD didn't have this feature. So this option may no longer be available. Another option is to call WaMu and instruct them to close the CD and transfer funds to your WaMu savings or checking account. The reader reported that it took WaMu around an hour to close and transfer the funds. WaMu states that it'll take within one business day. Another reader reported that the Online CD can be cashed out in person at a WaMu branch.
Below is a summary of my experience with the online application (Note, I already had a WaMu login ID from a previous WaMu Traditional CD).
- Page One allows you to select the term of the CD. One nice feature is that it includes the APY with the term so there's no doubt about receiving the advertised rate. Page one allows existing account holders to provide their login ID and password so they can prefill the application. I didn't receive any Lexus Nexus verification questions so that may be another advantage.
- Page Two required me to enter some personal data. Since I provided my login ID, it had my name and address, but I still had to enter my birth date, social and driver's license ID.
- Page Three allowed me to verify all my personal data. It also provided links to the account disclosure. This was the only place that I found the early withdrawal penalty listed (180 days for a 12-month CD). Page three also required me to agree to the following credit reporting authorization:
I authorize and consent to WaMu obtaining credit reports in connection with this transaction, using the information to evaluate my application, for consideration of other accounts and services, and any other lawful purpose.
- Page Four dealt with account funding. The only option that I saw was to fund the account with an ACH debit from another bank's checking or savings account. I assume if you had a WaMu savings or checking account, it would provide the option to fund it with one of those. In my case, I had to provide the routing and account number of the funding account. It described the account verification process that would be required:
To verify that the specified external account is yours, in 2-3 business days once your account is approved, WaMu will make two small deposits (each less than $1.00) and a matching withdrawal from your external account. We will ask you to confirm and verify the two deposits online, therefore verifying your true ownership of the external account.
- Page Five, the last page, confirmed the application was completed. It confirmed the yield, the term, the opening deposit and the funding bank. It also noted the following requirement about funding:
This is the CD term you selected and the fixed interest rate and APY that will apply during the term of your Online CD account, as long as you fund your account within 7 days.Within 5 minutes, I received email confirmation and instructions for account verification as promised. I was able to go to my main account page and see the new CD account listed.
Update 8/26/08: I received the two trial deposits into my savings account this morning. There was also one withdrawal of the sum of the two deposits. I was able to log into wamu.com and verify without problems. I would prefer if WaMu didn't do a withdrawal of the trial deposits since savings accounts are allowed no more than 6 electronic withdrawals per month. But at least it'll only be a total of two withdrawals (one for the trial deposits and one for the CD funding).
Update 8/28/08: The deposit was received this morning at WaMu. An email was sent by WaMu confirming the deposit. I logged into my WaMu account, and the deposit was shown. The start date was 8/27/08. I also logged into my funding account at GMAC Bank. The amount was debited by WaMu on 8/28/08. Here's a summary of my expereince with the Online CD account opening process:
- Sunday 8/24/08: Applied for the Online CD
- Tuesday 8/26/08: Trial deposits/withdrawal made by WaMu. I verified the deposits at WaMu
- Thursday 8/28/08: Funding account debited. Deposit amount is shown at WaMu
Recent WaMu News
This LA Times article questions the "Too big to fail" notion. According to this article by Mike "Mish" Shedlock, "Washington Mutual (WM) is on the brink," and it is unable to raise capital. WaMu is not alone. This Tampa Bay news article mentions that HSBC Bank has the same Weiss rating as WaMu (D+). The last part of this article has an important point to keep in mind:
"We can expect to see more bank failures, but it's not a repeat of the savings and loan crisis," said Greg McBride, senior analyst for Bankrate.com in North Palm Beach.
"That outlook isn't a cause for concern for individual savers provided that their funds are fully protected by deposit insurance."
Bank deposits at WaMu are FDIC insured under two banks: Washington Mutual Bank FSB and Washington Mutual Bank. Washington Mutual Bank appears to be the main bank which holds most of the deposits. This WaMu page provides more details of FDIC insurance and WaMu's two FDIC-insured banks. Note, there's no mention about the ability to have deposits under both banks to double your FDIC insurance. For other ways to extend your FDIC insurance coverage above $100K (along with the associated risks), please refer to my post, Extending FDIC Coverage Past $100K. For facts and misconceptions about the FDIC, please refer to this post.
To review all of my recent WaMu posts, please refer to this page. WaMu continues to offer Traditional 5% CDs for terms of 48-months and longer (see post).