Update 12/26/08: These CD rates have fallen. View current Chase CD rates.
Chase Bank continues to offer a special 5.00% APY 60-month CD. Minimum deposit is $10,000. This is shown in the bank's rate table as of 11/30/08. Note, you have to enter your zip code to see the table, so it may not be 5% in all places. There's also a special 36-month CD that's less competitive. It has an APY of 4.00%.
These are the same rates that WaMu is offering on its 36 and 60-month Online CDs. The main difference is that these WaMu online CDs have a minimum deposit of $1,000 instead of $10,000. Note, WaMu is now part of Chase.
Here are few of the certificate of deposit details from Chase's Rules and Regulations Document:
- Early withdrawal penalty for terms of one year or more is equal to $25 plus 3% of the amount withdrawn. For a 5% CD, this would be about 7.5 months of interest.
- 10 day grace period
- If your CD is redeemed during the grace period, it will not earn interest after the maturity date.
As you can see in my latest weekly summary, the best 60-month CD available for a $10K deposit has an APY of 5.25%. One advantage of this Chase Bank CD is that JPMorgan Chase is a strong bank which is now the largest depository bank in America. A strong bank is more important for long-term CDs. A FDIC-insured CD with a balance under the FDIC limits is protected if the bank fails, but the new bank that takes over the deposits is allowed to end the CD early. You won't lose any principal or interest, but the rate environment may be much worse. Finding a new CD with a similar rate may not be possible.
Another advantage of this Chase CD is that the early withdrawal penalty is less severe than others with higher rates. For example, Intervest National Bank is offering 5.25% APY for a 5-year term, but it has an early withdrawal penalty equal to half of the interest for the entire term of the certificate of deposit. That would be 30 months of interest for a 5-year CD.
Early withdrawal penalty is a very important issue to consider for long-term CDs especially when there's concern that all of the money the government is pumping into the economy could lead to inflation and much higher interest rates. However, this didn't happen to Japan in the 1990s. There are many difference between the US today and Japan in the 1990s, but there is still a risk we could see an extended period of very low bank rates.