Dedicated to Deposits: Deals, Data, and Discussion

5.20% 60-Month CD at Capital One Direct Banking

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Capital One Direct Banking
Update 11/26/08: The CD rate has gone down. Please check the bank's website for the latest rates.

Capital One Bank has increased the yield on its 5-year CD to 5.20% APY at its Direct Banking operation which is available nationwide. The other CD rates have remained the same. Many are still very competitive such as the 4.41% APY 18-month CD, the 5.00% APY 48-month CD and the 5.50% APY 7-year CD. The minimum deposit is $5,000. The Jumbo CD yields for the 4- and 5-year CDs earn an extra 5 basis points. These require a $100,000 minimum deposit. An additional 5 basis points rate is available for Costco members.

Capital One branches continue to offer a 5.25% APY 60-month CD and a 4.50% APY 24-month CD. Minimum deposit is $1,000. These require a branch visit to open (see post). As I mentioned in that post, one advantage of the branch CDs is that the early withdrawal penalties are more straightforward ($25 plus 3% of the withdrawal amount). The Direct Banking CD penalties factor in the Economic Replacement Value (see post).

Capital One Direct Banking continues to offer a competitive rate on its Online Savings Account. The yield is currently 3.55% APY for balances over $10,000. The main downside to this account seems to be Capital One's slow ACH transfer system in which transfers can take at least 3 business days to complete. I have more details in my Capital One Online Savings Account review.

FDIC and Financial Info

Capital One has two FDIC entities, however, I've been told that new accounts will be FDIC insured through Capital One, N.A. (FDIC Certificate # 4297). It's a large bank with $108.5 billion in assets and $72.5 billion in deposits based on 6/30/08 data. Capital One's rating at Bankrate is 3 stars (performing) based on 6/30/08 data. The rating at BauerFinancial continues to be 3.5 stars (good) based on 6/30/08 data.

  Tags: CD rates, Capital One Direct Banking

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Comments
5 Comments.
Comment #1 by Alex M (anonymous) posted on
Alex M
For Costco members going through special promo link generally adds another .05% to the published rates.
Costco link

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Comment #2 by BankVibe (anonymous) posted on
BankVibe
It seems the trend for most banks is to lower the rates of 6 mo - 2 year CD's while upping the ante for longer term CD's. I would still opp for an IRA (tax deffered if help for 5 years) rather than a 5 year CD at 5.20% IMO

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Comment #3 by Anonymous posted on
Anonymous
Capital One rating at bankrate.com is 5 stars.

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Comment #4 by Banking Guy (anonymous) posted on
Banking Guy
As I mentioned in the post, Capital One has two FDIC charters. These two have different Bankrate ratings (based on 6/30/08 data):

Capital One Bank (USA), Glen Allen, VA, FDIC Cert # 33954, Bankrate star rating of 5

I've been told by a Capital One banking rep that new deposits are held by Capital One, N.A. The FDIC shows Capital One, N.A. to hold most of the deposits, so this seems to be correct.

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Comment #5 by Anonymous posted on
Anonymous
CAUTION: If penalty for early withdrawal is a concern, this bank could be a problem, since they charge 6 months interest OR economic replacement value based on market conditions (their cost of replacing what you removed), whichever is greater. If $150,000 was invested for 7 years (or whatever term) and you cashed 2 1/4 years early, when the market had increased by 1 1/2% (they decide how great an increase based on THEIR assessment of the market, not yours), you would pay about $1,000 more than 6 months of penalty. How much LESS interest would you accept at some other institution to eliminate this risk? This can become a real bean-counter dilema. Remember, you have NO SAY in what they deem "market conditions" or by how much they could over-value their loss of your money. And you also have no control over the government calling in all U.S. Currency to exchange for the new pink money that I've been told, is printed and ready for distriubution. It happened to America's European friends whose Marks, Francs, etc. had to be converted to Euros. The problem there was "rounding down" odd money so 11,298 would become 11,000. Many lost money. Cap One does not know how they would handle such a situation.

Due to these uncertain economic conditions and squirrely penalties, I reduced my investment here by 50%, in favor of a lower rate with an absolute 90 day or maximum 6 months early withdrawal penalty, and a shorter term (which could turn out to be a negative if rates are lower at time of maturity...a tough call)

As for strength of this bank, Cap One USA NA is stronger than Cap One NA by their own admission, though both are individually FDIC insured.

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