Bank of America is offering a 9-month Risk Free CD with a promotional rate of up to 2.50% APY in several states. This rate includes a 0.25% rate bonus for opening the CD with $10,000 of new money. Without this, the rate is 2.25% APY. Maximum deposit is $1 million.
These rates are listed at Bank of America's Risk Free CD Page as of 3/04/09. Not all states have these rates. I've checked California, Florida, New York and Illinois at Bank of America's website, and all have the 2.50%/2.25% rates. However, Texas has lower rates (2.00%/1.75%). If you live in another state, please leave a comment about what's listed for your state.
The details of the Risk Free features are described in the small print:
We waive the early withdrawal penalty after the first 6 days of the account term (or the first 6 days following any partial withdrawal), when you reinvest the amount withdrawn in any Bank of America deposit account. We may require at least 7 days' prior written notice of your intended withdrawal.
It's important to note that penalty-free withdrawals are allowed only when those funds are transfered into an existing Bank of America account.
The CD can be opened online and funded with money from an existing Bank of America checking or savings account. It can also be funded with an ACH transfer from another checking or savings account at another financial institution. I was told via the online chat that this CD could also be opened at a branch.
According to the CSR, these promotional CD rates are subject to change daily. The rate locks at the time of the application. It's a fixed-rate CD, so once it's opened, the rate won't change until maturity. Finally, I was told they only do a soft credit inquiry, and not a hard pull. So there should be no impact to your credit score. Note, CSRs are often wrong on this.
Other Bank of America Promotions
Update 3/14/09: Bank of America is offering a 2.50% APY 12-month online CD with a $10K minimum deposit of new money. Offer is listed at this Bank of America promotional page. Note, the rate varies by state.
Bank of America has been advertising other promotions. On Monday a reader noted that BofA ads in the Chicago Tribune advertising a 2.75% APY 12-month CD. Minimum deposit is $10K, and it required a checking account or Premier or Private Bank relationship. According to the small print, it's available in FL, IL, MI, IN, MA and NH.
Bank of America has also been advertising promotional money market accounts. A reader mentioned seeing an ad in the LA Times for a 2.30% APY money market savings account with the rate guaranteed through 6/30/09. Minimum deposit is $10K, and it requires a Prima or Premier Checking Account relationship. This is similar to a promotion advertised in Dallas last week. For the Dallas promotion, the rate was 2.50% APY. I would think there are likely to be similar promotions in other states outside of Texas and California.
How It Compares to the Competition
Every now and then, BofA offers a decent rate on its CDs. Last year they were offering a 4.11% 7-month Online CD. The 2.50% APY may not sound that great, but unfortunately, in this current rate environment, it's very competitive. As a comparison, ING Direct's 9-month CD rate is only 1.25% APY. You can get a little better at some online banks, but not much. GMAC Bank is offering 2.65% APY. Factor in the Risk Free feature, and the Bank of America CD is a very good deal. Refer to my weekly rate summary for other rates.
Latest Bank of America News
Bloomberg reported that Bank of America's credit rating has been downgraded by Standard & Poor's to A from A+. Its acquisitions of Merrill Lynch and Countrywide have put stress on the company. BofA reported its first loss in 17 years in the fourth quarter. They've received $25 billion in TARP funds.
I wouldn't want to be a stock shareholder of BofA, but I doubt depositors have anything to worry about except for fees and bad customer service. As always, it's best to stay under the FDIC insurance limits.
Thanks to the readers who mentioned this Risk Free CD and the other BofA promotions in the Daily News & Deals Post.