An important detail regarding this CD is a severe early withdrawal penalty. According to the CD disclosure, the penalty for the 59 month CD would be over 29.5 months of interest on the amount withdrawn. Here's how it's described in the disclosure:
If your account has an original maturity greater than one year, the penalty will be the greater of either A or B, plus a $25 early withdrawal fee.
A. One-half of the interest that would have been earned on the funds withdrawn if held for the entire term.
B. 3% of the amount withdrawn.
Early withdrawal penalties for long term CDs are typically only 6 months of interest, so this is much worse. If inflation forces interest rates to shoot up, a small early withdrawal penalty can save you a lot of money, when you want to close the CD and move the money into an account with a higher rate.
US Bank does have an online application. However, I was told last year you can only open the CD online if you already have a checking account with them and you use the checking account to fund the CD. Otherwise, you have to come into one of their branches. They do not accept checks by mail to fund a CD.
US Bank has branches in several states. Below is the list of states with the number of offices in each:
Arizona - 60 Arkansas - 47
California - 338 Colorado - 147
Georgia - 1 Idaho - 91
Illinois - 128 Indiana - 24
Iowa - 110 Kansas - 31
Kentucky - 125 Minnesota - 135
Missouri - 219 Montana - 25
Nebraska - 61 Nevada - 58
North Dakota - 25 Ohio - 332
South Dakota - 20 Tennessee - 27
Texas - 1 Utah - 45
Washington - 187 Wisconsin - 127
Wyoming - 14
Financial Overview
One advantage of US Bank is that it's in better shape than many others. As this article points out, it had a difficult fourth quarter, however, it still had a profit, and it continues doing better than many peers.
Its ratings for safety and soundness are good: 3.5 stars (good) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 9/30/08 financial data.
US Bancorp is the holding company for US Bank N.A. and US Bank N.A North Dakota. Both banks have separate FDIC charters, but US Bank N.A is the main one for deposits with $147.6 billion in deposits. US Bank has been FDIC insured since 1934 (FDIC Certificate # 6548).
Other High Certificate of Deposit Rates
If you want over 4% on a CD, your best bet will be at a credit union. In my weekly summary I still have several credit unions offering over 4% on 5-year CDs. Two of the best are Northwest FCU with a 4.88% APY and Mountain America CU with a 4.50% APY. One advantage of Mountain America FCU is a mild early withdrawal penalty (only 3 months of interest).
